EMERGING MARKETS-Latam currencies strengthen, Brazil stocks rise after Lula detention

viernes 4 de marzo de 2016 18:00 GYT
 

(Updates to close, adds background)
    By Walker Simon and Bruno Federowski
    SAO PAULO, March 4 (Reuters) - Latin American currencies
appreciated on Friday, buoyed by firmer oil and commodity
prices, strong U.S. jobs growth and intensifying corruption
investigations in Brazil.
    All the region's major currencies firmed, with those of
Brazil, Chile and Colombia finishing up at least 1 percent. 
    In the United States, nonfarm payroll data published on
Friday beat forecasts, while oil prices touched two-month highs,
and were on track for a 10 percent gain this week. 
    Brazil's benchmark stock index rose more than 4
percent after police detained former President Luiz Inacio Lula
da Silva for questioning on Friday in an investigation of a
bribery and money laundering scheme.
    Police said they had evidence that Lula received illicit
benefits from kickbacks at state-controlled oil company
Petrobras in the form of payments and luxury real
estate. 
    The evidence against Lula also brings the operation closer
to his protegee and successor, President Dilma Rousseff, who is
fighting off impeachment and struggling to pull the country out
of its worst economic downturn in decades.
    "Maybe this is helping Brazilian assets because of the idea
that it will speed up the impeachment process (of Rousseff),"
said Guillaume Tresca, an emerging markets senior strategist at
Credit Agricole in Paris. "That is a very long process, but it
could trigger political change, and that is the only hope right
now."
    Analysts from political risk consultancy Eurasia Group said
the news made it more likely than not that Rousseff would not
finish her term.
    For months, Brazilian assets have often rallied when
prospects of a change in government appeared to increase.
Businesses had decried Rousseff's intervention in the economy,
but since her second term began in January, she has rolled back
some of the earlier initiatives.
    Lula's detention is part of a sweeping two-year
investigation that has ensnared powerful lawmakers and business
executives and was sparked by probes into kickbacks to
politicians from Petroleo Brasileiro SA, as Petrobras is
formally called.
    In international markets, the cost of insuring the country's
debt fell to a three-month low, and bonds rallied. 
    Indications that the central bank could ease its support for
the real drove the Brazilian currency off its session
high of 3.65 per U.S. dollar.
    The bank sold only 8,000 of the 9,600 currency swaps it has
been offering daily, a sign that it could allow about 15 percent
of the $10 billion in contracts maturing in April to expire. It
has fully rolled over every maturity since August.
    "We view this as an important signal by (the central bank)
as it shows that the monetary authority might not allow a sharp
nominal appreciation of the (real) beyond about 3.70," BNP
Paribas strategists wrote in a client note.
    
    Key Latin American stock indexes and currencies at 2055 GMT:
    
 Stock indexes               Latest         Daily  YTD pct
                                              pct   change
                                           change  
 MSCI Emerging Markets            792.65      1.6    -1.76
                                                   
 MSCI LatAm                     2,033.74     3.67     7.21
 Brazil Bovespa                49,144.81     4.13    13.37
 Mexico IPC                    44,843.04     0.23     4.34
 Chile IPSA                     3,838.39     0.55     4.30
 Chile IGPA                    18,796.55     0.47     3.55
 Argentina MerVal              13,269.27    -0.43    13.65
 Colombia IGBC                  9,564.65    -0.16    11.90
 Venezuela IBC                 16,318.24     0.31    11.86
                                                          
 Currencies                       Latest    Daily  YTD pct
                                              pct   change
                                           change  
 Brazil real                      3.7597     1.10     4.98
 Mexico peso                     17.7900     0.71    -3.15
 Chile peso                        680.2     1.00     4.34
 Colombia peso                  3,152.79     1.28     0.52
 Peru sol                         3.4561     0.17    -1.22
 Argentina peso (interbank)      15.2000     0.33   -14.59
                                                   
 Argentina peso (parallel)         15.67     0.26    -8.93
                                                   
 
    

 (Reporting by Walker Simon and Bruno Federowski; additional
reporting by Nelson Bocanegra and Christine Murray; Editing by
Richard Chang)