EMERGING MARKETS-Brazil's real extends gains as investors digest election
SAO PAULO, Oct 29 (Reuters) - Brazil's currency strengthened for a second straight session on Wednesday as investors reconsidered the market impact of President Dilma Rousseff's reelection. Other Latin American currencies also traded stronger against the dollar on expectations the U.S. Federal Reserve would signal at the end of its policy-setting meeting on Wednesday that any interest rate hikes are still a long way off. Regional stock markets were mixed, with Brazil's Bovespa down nearly 1 percent and Mexico's IPC index up 0.5 percent. Rousseff's victory over market-friendly challenger Aecio Neves over the weekend drove the real to its weakest level since 2005 on Monday, though the move was less than many investors had forecast and the currency has since erased those losses. "Everyone expected the dollar to explode (against the real) this week, but it didn't happen," said Jankiel Santos, chief economist with Espirito Santo Investment Bank in Sao Paulo. "As a result a lot of those positions are being unwound." Investors also took a less negative view on the real after names of potential finance minister nominees, some of them market-friendly, began circulating in the media. Nomura analyst Tony Volpon also attributes the current "honeymoon period" to investors recognizing that Brazil's high level of foreign reserves is buffering the country from an imminent crisis while attractive local yields continue to support the carry trade. The MSCI Latin American stock index rose for the third session in four. Brazil's Bovespa stock index retreated, however, after a sharp rise on Tuesday. Losses were concentrated in widelytraded shares such as those from mining firm Vale SA and from state-run oil producer Petroleo Brasileiro SA, known as Petrobras. Both companies tend to attract a high proportion of foreign investors looking for exposure to Brazilian equities. Shares of steelmaker Usinas Siderurgicas de Minas Gerais SA, known as Usiminas, fell 4.2 percent after the company posted a third-quarter loss before market open. Key Latin American stock indexes and currencies at 1430 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging 1006.35 1.39 -1.01 Markets MSCI LatAm 3070.29 0.75 -4.79 Brazil Bovespa 51892.95 -0.84 0.75 Mexico IPC 44170.82 0.3 3.38 Chile IPSA 3800.86 0.23 2.75 Chile IGPA 18672.14 0.16 2.44 Argentina MerVal 10449.72 0.02 93.84 Colombia IGBC 13193.18 0.35 0.93 Peru IGRA 16005 0.01 1.60 Venezuela IBC 2842.34 0 3.86 Currencies daily % YTD % change change Latest Brazil real 2.4340 1.54 -3.17 Mexico peso 13.417 0.22 -2.88 Chile peso 576.5 0.43 -8.74 Colombia peso 2043.74 0.57 -5.47 Peru sol 2.912 -0.14 -4.09 Argentina peso 8.5025 0.00 -23.64 (interbank) Argentina peso 14.57 0.75 -31.37 (parallel) (Reporting by Bruno Federowski and Asher Levine Editing by W Simon)
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