EMERGING MARKETS-Brazil's currency plunges as oil, ruble spook investors
(Adds trader comment, Tombini comments, updates prices) SAO PAULO, Dec 16 (Reuters) - Brazil's currency fell sharply on Tuesday as diving oil prices, a plunge in the Russian ruble, and uncertainty over the central bank's currency-intervention program drove investors toward safe-haven assets. The Brazilian real fell as low as 2.76 per dollar, near its weakest in 10 years. The country's Bovespa stock index pared early losses as bargain-hunting helped Petrobras shares recover from an early drop. Brent crude fell more than $1 per barrel on Tuesday to below $60 for the first time since July 2009 as concern over a global supply glut continued to thrash prices. Russia said on Tuesday it would not cut oil output to help prop up prices and refrained from calling on OPEC to do so even though its economy was showing signs of severe stress. The ruble tumbled nearly 10 percent for the second day on Tuesday, with confidence in the central bank evaporating after an ineffectual overnight rate hike. Brazil's real, which has weakened nearly 6 percent this month on uncertainty over the future of the central bank's currency-intervention program and the outlook for U.S. interest rates, extended its losses into a fifth session. Concerns over the intervention program continued to fuel caution after central bank chief Alexandre Tombini offered only vague details on how the program would be changed next year. In a Tuesday speech, Tombini said the central bank could reduce the daily supply of currency swaps to as little as $50 million or leave it unchanged at $200 million. The intervention program offers hedging protection to local businesses and helps support the real by acting as the equivalent of future dollar sales. "Even if things were calm abroad, the dollar would probably continue strengthening against the real," said a trader who asked not to be identified because he is not authorized to speak to the media. "The market is not going to rest easy until it knows what is going to happen with the (intervention) program next year." Yields on Brazilian interest rate futures <0#DIJ:> shot higher, with investors betting on bigger rate hikes in the future to help contain inflationary pressure from the weaker currency. The Bovespa stock index opened with a decline of more than 2 percent, though it returned part of the losses shortly after. Preferred shares of Brazil's state-run oil producer, Petroleo Brasileiro SA, were volatile following a six-day slump as investors pounced on cheap prices. The stock is down 43 percent this year, hurt by both an ongoing corruption investigation at the company and the decline in oil prices. Key Latin American stock indexes and currencies at 1600 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 910.04 -1.52 -7.84 MSCI LatAm 2,484.59 -1.94 -20.84 Brazil Bovespa 46,802.47 -0.46 -9.13 Mexico IPC 39,840.91 -1.22 -6.75 Chile IPSA 3,725.90 -0.72 0.72 Chile IGPA 18,349.51 -0.62 0.67 Argentina MerVal 7,568.51 -0.17 40.39 Colombia IGBC 10,272.56 0.09 -21.41 Peru IGRA 14,347.34 -0.52 -8.93 Venezuela IBC 3,825.26 1.94 39.78 Currencies daily % YTD % change change Latest Brazil real 2.7491 -2.19 -14.27 Mexico peso 14.7940 -0.23 -11.92 Chile peso 621.5000 -0.34 -15.35 Colombia peso 2449.5000 -0.94 -21.13 Peru sol 2.9690 -0.13 -5.93 Argentina peso 8.5500 0.03 -24.06 (interbank) Argentina peso 13.1000 0.53 -23.66 (parallel) (Reporting by Brono Federowski and Asher Levine; Editing by Jeffrey Benkoe; and Peter Galloway)
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