CORRECTED-EMERGING MARKETS-Latam currencies up on dovish Yellen; Colombia peso jumps
(Corrects in fifth paragraph to say oil prices hit 8-month highs) By Bruno Federowski SAO PAULO, June 7 (Reuters) - Latin American currencies strengthened on Tuesday after U.S. Federal Reserve Chair Janet Yellen refrained from setting a time frame for further interest rate hikes. In a speech on Monday, Yellen did not repeat her assessment that rate increases would be appropriate in coming months. Nevertheless, she gave a largely upbeat assessment of the U.S. economy and indicated further hikes were coming. Emerging market currencies tend to benefit from low interest rates abroad, which often drive foreign investors toward high-yielding bonds. The Colombian peso shot up more than 2 percent, its biggest daily gain since mid-April, and far outperformed its peers. A rally in oil prices to eight-month highs also boosted the currency after a spate of attacks on infrastructure in Nigeria depressed crude supply. The peso had been pressured after Colombia's central bank backed off its intervention policy. However, bets that the bank could increase rates to fight currency weakness grew following a report showing inflation kept rising well above its long-term target. The Brazilian real strengthened 0.5 percent after central bank chief nominee Ilan Goldfajn defended the country's floating exchange rate in a Senate hearing. "The market interpreted that as a sign that there will be less meddling in the foreign exchange market when Ilan (Goldfajn) takes charge," said Spinelli brokerage trader José Carlos Amado. Many traders took the words as a sign that Goldfajn would allow the currency to strengthen past 3.50 per U.S. dollar, a milestone that often triggered intervention under the current central bank chief. The real had weakened by as much as 0.7 percent in morning trading following local news reports that Brazil's top prosecutor had demanded the arrest of several high-ranking politicians. Key Latin American stock indexes and currencies at 1450 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 837.19 1.69 3.67 MSCI LatAm 2142.55 1.19 15.71 Brazil Bovespa 50628.78 0.39 16.79 Mexico IPC 46230.43 0.81 7.57 Chile IPSA 4009.65 0.55 8.95 Chile IGPA 19729.34 0.49 8.69 Argentina MerVal 13106.86 1.98 12.26 Colombia IGBC 9769.51 0.38 14.30 Venezuela IBC 15568.64 -0.11 6.72 Currencies daily % YTD % change change Latest Brazil real 3.4709 0.54 13.72 Mexico peso 18.5565 0.60 -7.15 Chile peso 680.5 -0.15 4.29 Colombia peso 2950.19 2.23 7.43 Peru sol 3.3049 0.18 3.30 Argentina peso (interbank) 13.8000 0.00 -5.92 Argentina peso (parallel) 14 1.14 1.93 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
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