EMERGING MARKETS-Brazil stocks, currency lead Latam losses on political woes

miércoles 23 de marzo de 2016 12:53 GYT

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