EMERGING MARKETS-Brazil currency leads Latam losses on political woes
(Adds other markets, updates prices) By Bruno Federowski SAO PAULO, March 23 (Reuters) - Brazil's currency led losses in Latin American markets on Wednesday on concerns that a political crisis threatening President Dilma Rousseff may drag on 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 interest 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 a U.S. interest rate increase have 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 Rousseff's eventual ouster could rekindle investor sentiment and lay the groundwork for an economic recovery. Many investors also booked profits on the rally, helping drive shares of state-controlled companies lower. The Brazilian real weakened 2.1 percent, 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. Brazil's benchmark stock index also fell 2.6 percent, while Argentina's MerVal index fell 3.3 percent in thin trading ahead of a long holiday weekend, dragged down by a 4 percent tumble in oil prices. Mexico's peso fell 1.5 percent to 17.5875 per U.S. dollar, its steepest loss since mid-January. Key Latin American stock indexes and currencies at 2055 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 821.71 -1.06 3.47 MSCI LatAm 2094.92 -3.04 14.49 Brazil Bovespa 49690.05 -2.59 14.63 Mexico IPC 45647.57 0.03 6.21 Chile IPSA 3899.26 -1.31 5.95 Chile IGPA 19116.05 -1.13 5.31 Argentina MerVal 12499.17 -3.3 7.06 Colombia IGBC 9758.46 0.15 14.17 Venezuela IBC 14957.41 0.04 2.53 Currencies daily % YTD % change change Latest Brazil real 3.6755 -2.09 6.88 Mexico peso 17.5875 -1.50 -2.07 Chile peso 678 -0.68 4.47 Colombia peso 3066.93 -1.22 3.23 Peru sol 3.3781 0.85 1.05 Argentina peso (interbank) 14.4900 -0.69 -11.61 Argentina peso (parallel) 15.25 0.59 -6.87 (Reporting by Bruno Federowski, Additional reporting by Anna Yukhananov; Editing by G Crosse and James Dalgleish)
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