EMERGING MARKETS-Brazil's real pares losses after protests
SAO PAULO, March 16 (Reuters) - Brazil's currency rebounded slightly on Monday on investor relief that massive street protests over the weekend were peaceful. The Brazilian real has weakened roughly 17.5 percent against the dollar this year and hit a nearly 12-year low on Friday. Investors are cutting exposure to Brazilian assets on concerns over a recession, a credit rating downgrade and the fallout from a massive corruption scandal at state-run oil producer Petroleo Brasileiro SA, known as Petrobras. Street protests over corruption and economic malaise took place on Sunday in Brazil's major cities. Some traders took short positions on Friday to protect against losses from additional political uncertainty should the protests have ended in violence, which did not occur. Still, investors are unclear over what the economic impact of louder and more widespread government disapproval will be, especially as more fiscal tightening measures are implemented. "Our view is that it will not change much in the short term, and that the government will continue moving ahead with fiscal tightening," wrote Brown Brothers Harriman analysts led by Marc Chandler on Monday. It is unclear how far the government is prepared to go with the tightening once it starts to be felt by the population, the note added. Elsewhere in Latin America, Colombia's peso hit its weakest level in nearly 11 years as falling oil prices continue to hammer the currency. Petroleum is Colombia's top export. Chile's peso was little changed, while Mexico's peso nearly erased the previous session's losses. The outlook for all currencies in the region will hinge, however, on the outcome of the U.S. Federal Reserve's next policy statement, expected on Wednesday. Signals that the Fed could raise interest rates sooner than previously expected will likely drive emerging market currencies sharply lower. Equities markets were little-changed, with Brazil's Bovespa stock index and Mexico's IPC index both down about 0.15 percent. Key Latin American stock indexes and currencies at 1731 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 940.82 0.13 -1.75 MSCI LatAm 2354.94 0.65 -14.22 Brazil Bovespa 48521.41 -0.15 -2.97 Mexico IPC 44002.29 -0.12 1.99 Chile IPSA 3845.75 0.5 -0.14 Chile IGPA 18785.09 0.41 -0.45 Argentina MerVal 10521.619 2.69 22.64 Colombia IGBC 9787.56 -0.2 -15.88 Peru IGRA 12529.29 -0.85 -15.31 Venezuela IBC 4514.57 -0.76 17.00 Currencies daily % YTD % change change Latest Brazil real 3.2235 0.70 -17.56 Mexico peso 15.4105 0.49 -4.32 Chile peso 639.75 -0.12 -5.21 Colombia peso 2681.49 -0.50 -10.95 Peru sol 3.097 -0.03 -3.81 Argentina peso 8.7800 0.06 -2.62 (interbank) Argentina peso 12.83 1.01 9.12 (parallel) (Reporting by Asher Levine and Bruno Federowski; editing by Andrew Hay)
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