EMERGING MARKETS-Brazil currency falls, yields on rate futures drop

jueves 1 de septiembre de 2016 18:58 GYT

(Recasts; updates prices)
    By Bruno Federowski
    SAO PAULO, Sept 1 (Reuters) - Brazil's currency weakened and
yields paid on interest rate future contracts fell on Thursday
as traders increased bets on an October rate cut after the
central bank dropped a mention to a lack of space for lower
borrowing costs from its policy statement.
    In an unanimous vote, the bank on Wednesday held its
benchmark Selic rate steady at 14.25 percent as expected.
    But the central bank also laid out a blueprint to lower
rates, highlighting a reduction in uncertainty over the approval
of austerity measures and easing food inflation. 
    "All in all, while reckoning that it still continues to be a
bold call, we think there is a possibility for a monetary easing
cycle to start at the next Copom meeting," economists with
Haitong investment bank wrote in a client note, referring to the
bank's monetary policy committee.
    Market bets were split about even between a 25-basis-point
cut in October and rates being held, according to Reuters
    The move also reflected lower demand for high-yielding
currencies in general as traders increased bets on an imminent
U.S. rate hike ahead of the widely followed nonfarm payrolls
report on Friday.
    Brazilian shares seesawed and its currency fell on
Thursday, as investors tried to discern when U.S. interest rates
would rise and whether the government would make fiscal
adjustments after the country's Senate voted to oust former
President Dilma Rousseff a day prior. 
    The real closed at 3.2495 per dollar, down 0.63 percent from
    In Mexico, the peso weakened 0.18 percent to close at
18.7475 per dollar. 
    Key Latin American stock indexes and currencies at 1640 CST:
 Stock indexes                    Latest    Daily pct  YTD pct
                                             change    change
 MSCI Emerging Markets            891.08      -0.29     12.21
 MSCI LatAm                      2,401.80       0       31.26
 Brazil Bovespa                  58,236.27    0.58      34.34
 Mexico IPC                      47,563.34    0.05      10.67
 Chile IPSA                      4,120.80     0.04      11.97
 Chile IGPA                      20,449.09     0.1      12.66
 Argentina MerVal                15,740.92    0.58      34.82
 Colombia IGBC                   10,154.01    -0.22     18.80
 Venezuela IBC                   11,962.25      0       -18.0
 (Reporting by Bruno Federowski, additional reporting by Natalie
Schachar, editing by G Crosse)