EMERGING MARKETS-Brazil real at near 6-month lows, intervention eyed
SAO PAULO, Sept 15 (Reuters) - The Brazilian real dropped to its lowest level in nearly six months on Monday, testing the central bank's willingness to tolerate a weaker currency, while the Colombian currency strengthened the most since late July. The real fell 0.6 percent to 2.3487 reais per dollar on investor concern over gains by President Dilma Rousseff in a voter poll before next month's election. Investors are hopeful that a different administration would enact more market-friendly policies. But traders were cautions about betting on a further decline in the currency in the short term as they kept an eye on potential central bank intervention to limit further weakness in the real, which makes imports more expensive and contributes to inflation. "The currency returned to (weakened) levels where, historically, the central bank has shown signs of discomfort, so the market remains cautious," said Reginaldo Galhardo, head of currency trading at Sao Paulo brokerage Treviso. A government source told Reuters late Friday that the bank will extend its currency intervention program into 2015 and may increase the rollover pace of expiring currency swaps to curb volatility in the real. Colombia's peso strengthened for the first session in six and its most since late July after minutes from the central bank's most recent policy-setting meeting, released late on Friday, showed some board members thought there was no need to continue raising interest rates. Colombian policymakers last raised the benchmark rate by 25 basis points to 5.5 percent. Analysts were divided over the outlook for interest rates in Colombia. Some, such as BNP Paribas' Nader Nazmi, estimate the bank will likely pause its hiking cycle for the year to monitor its effects. Others such as Nomura analyst Mario Castro see the bank implementing two more 25 basis point increases, citing Nomura's expectations for an increase in core inflation in the fourth quarter. Chile's peso swung widely before settling slightly weaker in the afternoon. Prices for copper, the country's main export, slipped towards three-month lows on Monday after data showed growth at China's factories stumbled to its weakest in nearly six years in August. In equities markets, Brazil's Bovespa stock index recouped part of the previous session's losses. The gains were driven by steelmakers and iron-ore miner Vale SA after spot iron ore posted its biggest one-day rise since March on Monday. The broader MSCI Latin American stock index posted its first rise in eight sessions, with Mexico's IPC stock index edging higher and Chile's IPSA stock index little-changed. Key Latin American stock indexes and currencies at 1515 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging 1054.33 -0.68 5.87 Markets MSCI LatAm 3406.53 0.1 6.33 Brazil Bovespa 57267.5 0.6 11.18 Mexico IPC 45904.07 0.23 7.44 Chile IPSA 3987.13 -0.1 7.78 Chile IGPA 19377.24 -0.08 6.31 Argentina MerVal 11143.869 0.81 106.71 Colombia IGBC 14242.34 -0.2 8.96 Peru IGRA 16966.75 0.24 7.70 Venezuela IBC 2739.32 1.25 0.10 Currencies daily % YTD % change change Latest Brazil real 2.3434 -0.36 0.57 Mexico peso 13.2322 0.14 -1.53 Chile peso 595.2 -0.54 -11.61 Colombia peso 1985 0.55 -2.67 Peru sol 2.86 0.03 -2.34 Argentina peso 8.4025 0.00 -22.73 (interbank) Argentina peso 14.35 0.35 -30.31 (parallel) (Reporting by Bruno Federowski and Asher Levine Editing by W Simon)
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