EMERGING MARKETS-Brazil currency hits all-time low on political wrangling

martes 22 de septiembre de 2015 12:15 GYT

SAO PAULO, Sept 22 (Reuters) - Brazil's currency fell to its
weakest level ever on Tuesday as investors cast a wary eye on
negotiations over spending bills that could further complicate
the country's tenuous fiscal position.
    The currency, like others across Latin America, was also
hammered by a global rise in the dollar sparked by increased
expectations that the U.S. Federal Reserve is still on track to
raise interest rates this year.
    Brazil's real  fell 2 percent to a session low
of 4.06 per dollar, breaking a major psychological barrier and
surpassing the previous record low of 4.014 reached in October
    The currency has weakened over 34 percent against the dollar
this year as a sharp economic recession, lower commodities
prices, expectations for higher interest rates in the United
States and political turbulence at home sap investor demand for
Brazilian assets. 
    Politics remained in focus on Tuesday, with Brazilian
legislators set to vote on a series of controversial bills
recently vetoed by embattled President Dilma Rousseff.
    In particular, investors are monitoring the possible
override of Rousseff's veto on a bill that would grant an up to
78.6 percent pay raise for judiciary employees. Such a spending
increase would put Brazil's fiscal savings goal at risk and
further increase the chances of additional sovereign credit
    Standard & Poor's stripped Brazil of its investment-grade
credit rating earlier this month.
    "The difficulties that the administration is facing in
Congress is making the country nearly ungovernable from a fiscal
standpoint," said João Paulo de Gracia Correa, a trader at
brokerage SLW in Sao Paulo.
    Moody's Investors Service said on Tuesday, however, that
Brazil remains in better shape than countries that lost their
investment-grade credit rating, suggesting the country's sharp
economic downturn was not enough for a downgrade to junk.
    Other Latin American currencies fell sharply as well, with
Mexico's peso posting its biggest intraday decline in
more than a month and Chile's peso plunging its most in
over two years.
    Atlanta Fed President Dennis Lockhart said on Monday that a
rate hike later this year was still possible, adding pressure to
emerging market currencies. A decline in the price of key Latin
American commodities exports such as copper and
petroleum also weighed as investors continued to fret
over an economic slowdown in China. 
    Latin American stock markets fell sharply, with the broader
MSCI Latin American stock index losing 3.5
percent, its biggest slide since late August.

    Key Latin American stock indexes and currencies at 1542 GMT:
 Stock indexes                      daily %    YTD %
                                     change   change
 MSCI Emerging Markets      805,64    -1,22   -14,71
 MSCI LatAm                1903,77    -3,23   -27,88
 Brazil Bovespa          45432,921    -2,48    -9,15
 Mexico IPC               43109,81    -1,17    -0,08
 Chile IPSA                3742,52    -1,35    -2,82
 Chile IGPA               18301,25    -1,17    -3,02
 Argentina MerVal          9473,05    -7,82    10,42
 Colombia IGBC             9348,06    -1,41   -19,65
 Venezuela IBC            12808,73    -1,26   231,94
 Currencies                         daily %    YTD %
                                     change   change
 Brazil real                4,0442    -1,60   -34,29
 Mexico peso                16,859    -1,18   -12,55
 Chile peso                  697,7    -1,86   -13,09
 Colombia peso             3068,95    -1,99   -22,19
 Peru sol                   3,2121    -0,50    -7,26
 Argentina peso             9,3900    -0,03    -8,95
 Argentina peso              15,88     0,13   -11,84

 (Reporting by Asher Levine and Bruno Federowski Editing by W