EMERGING MARKETS-Mexico peso jumps after rate hike, intervention surprise
By Bruno Federowski SAO PAULO, Feb 17 (Reuters) - Mexico's peso surged on Wednesday, leading regional currency gains after the country's central bank surprised markets with an unexpected interest rate hike and unveiled a new intervention policy while the government said it would cut spending. The peso strengthened nearly 5 percent after the surprise moves to 17.962 per dollar, before paring back gains to 2.9 percent later in the day. The central bank raised its benchmark interest rate by 50 basis points to 3.75 percent. It also intervened directly in the foreign exchange market to sell dollars as part of a major policy shift to support the peso, which has weakened to record lows in recent weeks. Finance Minister Luis Videgaray also said the government would cut 2016 spending by 132 billion pesos, equivalent to about 0.7 percent of gross domestic product. Elsewhere in the region, Colombia's peso rallied on Wednesday afternoon on rising oil prices, trading up 1.6 percent. The currency had slumped in the morning after Standard & Poor's revised its outlook for Colombia's rating to negative from stable on Tuesday. Brazilian markets also advanced as stocks and currency posted gains. Shares of state-controlled oil company Petroleo Brasileiro SA rose a day after Reuters reported that state-run banks are considering converting part or all of their outstanding loans to Petrobras into equity. Traders also cheered a bill which would relieve Petrobras, as the company is known, from its obligation of participating in all new projects in the subsalt polygon oil region. Senate President Renan Calheiros said the chamber could vote on the bill as early as Wednesday. Latin American stock indexes and currencies at 2045 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 736.28 0.67 -7.9 MSCI LatAm 1,770.17 3.42 -6.46 Brazil Bovespa 41,630.82 1.67 -3.97 Mexico IPC 43,517.26 0.97 1.26 Chile IPSA 3,738.61 0.65 1.59 Chile IGPA 18,339.40 0.64 1.04 Argentina MerVal 12,058.95 4.37 3.29 Colombia IGBC 8,998.38 2.65 5.28 Venezuela IBC 15,590.36 0 6.87 Currencies Latest Daily YTD pct pct change change Brazil real 3.9824 0.24 -0.89 Mexico peso 18.3520 2.88 -6.11 Chile peso 700.2 1.29 1.36 Colombia peso 3,358.99 1.61 -5.65 Peru sol 3.5031 0.23 -2.54 Argentina peso (interbank) 14.9800 -0.87 -13.33 Argentina peso (parallel) 15.27 -1.24 -6.55 (Reporting by Bruno Federowski, Miguel Angel Gutierrez, Michael O'Boyle, and Nelson Bocanegra, editing by G Crosse)
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