EMERGING MARKETS-Brazil's real gains as U.S. data points to later rate hike
SAO PAULO, May 15 (Reuters) - Brazil's currency strengthened on Friday after U.S. economic data suggested that interest rates in the world's largest economy could rise later rather than sooner. Other currencies in the region were mixed though equities markets were mostly higher, with the MSCI Latin American stock index rallying for the third straight day. Data on Friday showed U.S. industrial production fell for a fifth straight month in April. A separate release on Friday showed consumer confidence dropped sharply in early May, cooling the outlook for growth in the world's largest economy. The data led investors to bet that the Federal Reserve would probably raise interest rates later in the year than earlier thought, making higher-yielding assets such as Latin American securities more attractive. "It's becoming increasingly difficult to believe that the U.S. economy is firing on all cylinders," said Reginaldo Galhardo, head of currency trading at brokerage Treviso in Sao Paulo. The Brazilian real weakened below the three-per-dollar level, where it has found technical resistance in recent weeks. Still, most analysts see that exchange rate as a floor for the currency, given ongoing uncertainty over the health of Brazil's economy and doubts over the success of a recently implemented austerity program. Colombia's peso weakened for the third straight session. The country's central bank will likely hold its key lending rate at 4.5 percent as predictions for economic growth continue to decline and inflation expectations rise, a Reuters survey showed on Friday. In local stocks, Brazil's benchmark Bovespa index rose for the second straight session, led by shares of banks. State-run Banco do Brasil SA edged higher after executives signaled on a Friday conference call that the lender would take a more conservative approach to lending as the Brazilian economy deteriorates. Key Latin American stock indexes and currencies at 1643 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1042.97 0.69 8.31 MSCI LatAm 2750.01 0.77 0.04 Brazil Bovespa 56872.87 0.38 13.73 Mexico IPC 45221.22 -0.11 4.81 Chile IPSA 4102.3 0.63 6.53 Chile IGPA 19890.88 0.53 5.41 Argentina MerVal 12308.869 -0.29 43.48 Colombia IGBC 10583.48 -0.13 -9.03 Peru IGRA - - - Venezuela IBC 5696.99 0.03 108.18 Currencies daily % YTD % change change Latest Brazil real 2.9852 0.21 -21.05 Mexico peso 15.0128 0.58 -13.21 Chile peso 595.7 -0.08 -11.68 Colombia peso 2413.4 -0.97 -19.95 Peru sol 3.1451 0.09 -11.20 Argentina peso 8.9425 0.03 -27.40 (interbank) Argentina peso 12.6 0.16 -20.63 (parallel) (Reporting by Asher Levine and Bruno Federowski Editing by W Simon)
© Thomson Reuters 2016 All rights reserved.