EMERGING MARKETS-Brazil real eases as cenbank acts to slow rally
By Bruno Federowski SAO PAULO, March 21 (Reuters) - The Brazilian real weakened on Monday after the central bank acted to weaken the rallying currency for the first time in three years. The central bank announced late last week that on Monday, it would sell as much as $1 billion in reverse currency swaps, are instruments through which the central bank can weaken the real. After slumping over the last few years as Brazil's once-booming economy slipped into a recession, the real last week strengthened to its highest level against the U.S. dollar in six months. "The central bank noticed strong dollar sales in futures markets and stepped up to fill this demand. It's an escape valve," said trader José Carlos Amado with Spinelli brokerage in São Paulo. Many traders believe President Dilma Rousseff's possible ouster could help rekindle investor trust in Latin America's biggest economy. Some traders had also speculated that the central bank could be aiming for a weaker currency in order to boost exports, although a weaker real could also pressure inflation. The real had earlier fallen by as much as 1.8 percent, but pared losses to about 1 percent after the central bank sold only some of the reverse currency swaps. The central bank sold only 5,500 of the 20,000 reverse currency swaps on offer. Shares of state-controlled oil company Petroleo Brasileiro SA rose ahead of quarterly results to be published after market close. Local media reported on Monday that Petrobras, as the company is known, is investigating practices in its human resources department that may have left it vulnerable to billion of reais in liabilities. Shares of TIM Participações SA jumped over 6 percent after the resignation of Marco Patuano as Chief Executive Officer of Telecom Italia, controller of the Brazilian telecommunications provider. Analysts saw the move as an indication of greater clout from Vivendi, Telecom Italia's main shareholder, which could ease a possible sale of TIM in the future. Key Latin American stock indexes and currencies at 1615 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 829.49 0.33 4.11 MSCI LatAm 2,149.05 -0.03 17.49 Brazil Bovespa 50,927.39 0.22 17.48 Mexico IPC 45,482.39 0.1 5.83 Chile IPSA 3,974.44 0.29 7.99 Chile IGPA 19,444.76 0.29 7.12 Argentina MerVal 12,773.02 -1.03 9.40 Colombia IGBC 9,699.71 0.97 13.48 Venezuela IBC 14,942.07 -0.03 2.43 Currencies Latest Daily YTD pct pct change change Brazil real 3.6036 -0.65 9.53 Mexico peso 17.3890 0.05 -0.91 Chile peso 676.2 -0.10 4.95 Colombia peso 3,072 -0.10 3.17 Peru sol 3.3881 -0.26 0.76 Argentina peso (interbank) 14.4975 2.02 -10.45 Argentina peso (parallel) 15.43 0.84 -7.52 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier)
© Thomson Reuters 2016 All rights reserved.