BRASILIA, Sept 4 (Reuters) - Latin American stocks fell more than 2 percent and Brazil’s currency returned to 13-year lows on Friday after a long-waited U.S. August jobs report kept alive prospects of a Federal Reserve rate hike later this month.
The broader MSCI Latin American stock index approached its lowest level since 2009, while the Brazilian real weakened past the 3.8 per dollar, unseen since 2002, for a second straight day.
Although U.S. job growth slowed more than expected in August, the unemployment rate fell to a near 7-1/2 low and wages picked up, reviving bets on a rate hike by the Fed on September 17. Yields on U.S. government debt rose, while the dollar moved higher against a broad basket of currencies.
Prospects of rising U.S. interest rates usually reduce the appeal of higher-risk investments such as Latin American assets. Commodities, the main export of most Latin American countries and also sensitive to U.S. rates and dollar trends, fell 0.7 percent as oil prices slipped 1.0 percent.
Brazil’s real faced additional pressure on fears Finance Minister Joaquim Levy could leave office because of disagreements over his austerity plan, which opponents blame for deepening the country’s recession. The government on Thursday dismissed the market rumors.
The Brazilian real is the global emerging currency most prone to sell off, according to a Reuters poll on Thursday. Although its fair value is calculated at about 3.5 per dollar, JPMorgan analysts revised their forecasts to predict an exchange rate of 4.1 per dollar at year-end and 4.35 at mid-2016.
“Recent deterioration in economic and political outlook in Brazil has increased the volatility in asset prices,” wrote the economists led by Cassiana Fernandez in a note. “Without the fiscal anchor, we believe the real will need to adjust beyond fundamental drivers.”
The benchmark Bovespa stock index fell nearly 2 percent as shares of state-run oil producer Petroleo Brasileiro SA, known as Petrobras, and miner Vale SA dropped between 2 and 3 percent. Benchmark stock indexes in Mexico and Chile also dropped more than 1 percent. (Reporting by Silvio Cascione; Editing by Andrew Hay)