EMERGING MARKETS-Brazil stocks, currency lead Latam losses on political woes
By Bruno Federowski SAO PAULO, March 23 (Reuters) - Brazilian stocks and currency led widespread losses in Latin American markets on concerns that a political crisis threatening Brazil President Dilma Rousseff may drag on for longer than expected, while the central bank moved to weaken the real for a third straight day. Latin American currencies weakened as traders reconsidered their bets on U.S. monetary policy after Federal Reserve policymakers encouraged expectations of at least two quarter-percentage-point rate increases this year. A slump in world crude prices helped dampen sentiment after a higher-than-expected U.S. inventory build. "The odds of an U.S. interest rate increase has risen and that, coupled with a drop in oil prices, is hurting commodity-related currencies," said Carlos Vieira, an economist with Lerosa Investimentos brokerage in São Paulo. Rousseff said on Tuesday she will not resign despite Brazil's worst political crisis in years, saying she had not committed any crimes. Later on Tuesday, a Supreme Court Justice questioned a decision to make public a taped conversation between Rousseff and former President Luiz Inácio Lula da Silva that sparked mass protests against the government last week. Judge Teori Zavascki also ordered the wiretap case returned to the jurisdiction of the top court, a move traders believe could prolong Brazil's worst political crisis in two decades. Brazilian markets have rallied in recent weeks on hopes that Rousseff's ouster could rekindle investor sentiment and lay the groundwork for an economic recovery. Many investors also booked profits on the rally, helping to drive shares of state-controlled companies lower. The Brazilian real weakened more than its Latin American peers as the central bank acted for a third day in a row to soften the currency. Many traders believe the bank could be aiming for a weaker real to help exporters deal with the deep economic recession. The bank has sold $1.625 billion in reverse currency swaps - contracts which function like buying U.S. dollars in futures markets - since the beginning of the week, a tool it had not used in three years. Key Latin American stock indexes and currencies at 1610 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 820.69 -1.18 4.58 MSCI LatAm 2,090.55 -3.24 18.08 Brazil Bovespa 49,707.42 -2.55 14.67 Mexico IPC 45,519.47 -0.25 5.91 Chile IPSA 3,896.52 -1.38 5.88 Chile IGPA 19,106.06 -1.19 5.26 Argentina MerVal 12,617.44 -2.38 8.07 Colombia IGBC 9,582.53 -1.65 12.11 Venezuela IBC 14,957.41 0.04 2.53 Currencies Latest Daily YTD pct pct change change Brazil real 3.6710 -1.93 7.52 Mexico peso 17.5500 -1.27 -1.82 Chile peso 677.4 -0.59 4.77 Colombia peso 3,071.74 -1.36 3.18 Peru sol 3.4001 0.21 0.41 Argentina peso (interbank) 14.4500 -0.42 -10.16 Argentina peso (parallel) 15.26 0.52 -6.49 (Reporting by Bruno Federowski; editing by Daniel Flynn, G Crosse)
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