EMERGING MARKETS-Brazil real underperforms Latam currencies on S&P downgrade
(Updates prices) By Bruno Federowski SAO PAULO, Feb 18 (Reuters) - The Brazilian real underperformed on Thursday after the country received a rating downgrade, while Latin American markets broadly inched higher due to hopes for a stabilization in oil prices. Citing considerable economic and political challenges, Standard & Poor's downgraded Brazil deeper into junk territory. The currency closed down 1.4 percent at 4.046 to the dollar. Traders said the cut means it will take longer for Brazil to recoup its investment grade once it manages to escape ongoing economic and political crisis. S&P's decision also contributed to a drop in shares of Brazilian banks, which are particularly sensitive to ratings decisions. Stocks of Itaú Unibanco SA and Banco Bradesco SA were also pressured by a price-target cut by Credit Suisse. Brazil's benchmark Bovespa stock index closed down 0.4 percent, as it continues to be the worst-performing major market in Latin America. The Mexican peso jumped for a second day, climbing 0.4 percent, after the country announced a surprise interest rate hike, a new intervention policy and budget cuts. The currency has been strongly hit by weakness in the price of oil, which accounts for a large share of the country's exports and tax revenue. Mexico's IPC stock index fell 0.3 percent after oil prices pared their gains when data showed a build up in U.S. crude oil inventories. Venezuela, also a major oil producer, devalued its currency and raised heavily subsidized fuel prices on Wednesday as it grapples with galloping inflation and a deep recession. "Although the adjustments are positive and cannot be considered negligible, probably even exceeding market expectations, we remain of the opinion that they are too little and probably come too late," Barclays analyst Alejandro Arreaza wrote in a client note. Yields paid on Venezuela's benchmark global 2027 bond fell even after the central bank said the country's inflation hit 180.9 percent and the economy contracted 5.7 percent last year. Latin American stock indexes and currencies at 2050 GMT: MSCI Emerging Markets 744.67 1.21 -7.35 MSCI LatAm 1760.12 -0.57 -3.26 Brazil Bovespa 41477.63 -0.37 -4.32 Mexico IPC 43488.20 -0.22 1.19 Chile IPSA 3768.24 0.79 2.39 Chile IGPA 18459.61 0.66 1.70 Argentina MerVal 11991.07 -0.56 2.71 Colombia IGBC 9056.00 0.36 5.95 Venezuela IBC 16034.63 2.85 9.91 Currencies daily % YTD % change change Latest Brazil real 4.046 -1.36 -2.51 Mexico peso 18.3225 0.20 -6.34 Chile peso 703.52 -0.47 0.87 Colombia peso 3339.71 0.48 -5.38 Peru sol 3.507 -0.11 -2.72 Argentina peso (interbank) 15.0200 -0.13 -15.69 Argentina peso (parallel) 15.3 0.13 -7.22 (Additional reporting by Paula Arend Laier and Anna Yukhananov; Editing by Bernadette Baum, Bernard Orr)
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