EMERGING MARKETS-Brazil's real sinks as central bank reduces intervention
By Bruno Federowski SAO PAULO, Jan 2 (Reuters) - Brazil's real weakened on Friday after the central bank reduced the size of a market intervention program that has helped buffer the currency's losses against the dollar. The Brazilian central bank on Tuesday announced it will continue to intervene in the foreign exchange market at least until the end of March, though it halved the supply of currency hedges it offers on a daily basis to support the real. The bank will now sell as much as $100 million worth of currency swaps in daily auctions from Mondays through Fridays, down from $200 million previously. "The change in the central bank program makes it clear that, with the exchange rate at these levels, it's not going to fight (for a stronger real)," said Reginaldo Siaca, head of currency trading at the TOV brokerage in Sao Paulo. A slowdown in Brazil's economy, coupled with falling commodity prices and a strengthening U.S. economy, led the real to a 12.5 percent loss against the dollar in 2014. Siaca added that thin trading due to the New Year's holiday and a strengthening global dollar added to the day's move, which saw the real lose as much as 1.71 percent against the dollar. Brazil's currency market was closed on Wednesday and Thursday for the holiday. Other Latin American currencies weakened as well, with Chile's peso down over 1 percent and Mexico's peso falling about 0.5 percent. Brazil's Bovespa stock index sank for the second straight session, weighed down by shares of state-run oil company Petroleo Brasileiro SA and mining firm Vale SA. Both stocks have suffered from sliding prices for petroleum and iron-ore .IO62-CNI=SI in recent months. Key Latin American stock indexes and currencies at 1406 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 955.92 -0.04 -0.04 MSCI LatAm 2684.29 -1.59 0 Brazil Bovespa 49647.83 -0.72 -0.72 Mexico IPC - - - Chile IPSA 3853.82 0.07 0.07 Chile IGPA 18881.36 0.06 0.06 Argentina MerVal - - - Colombia IGBC 11634.63 - - Peru IGRA - - - Venezuela IBC 3898.81 1.04 42.47 Currencies daily % YTD % change change Latest Brazil real 2.7028 -1.69 -1.69 Mexico peso 14.824 -0.52 -0.52 Chile peso 612.3 -1.07 -1.07 Colombia peso 2393 -0.21 -0.21 Peru sol 2.979 - - Argentina peso 8.5500 0.03 0.03 (interbank) Argentina peso 14 -1.93 -1.93 (parallel) (Writing by Asher Levine Editing by W Simon)
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