EMERGING MARKETS-Latam currencies fall on commodities slump, U.S. rate hike speculation
By Bruno Federowski SAO PAULO, March 24 (Reuters) - Latin American currencies weakened across the board on Thursday on lower commodity prices and heightened speculation that a Federal Reserve interest rate hike could come as early as next month. St. Louis Federal Reserve President James Bullard joined a chorus of policymakers highlighting the odds that the U.S. central bank could increase rates at least twice this year. Bullard said another hike "may not be far off," leading some to speculate that a move could take place as soon as April. Some traders believed he meant to shift bets in financial markets, which currently imply a single rate increase this year. Higher U.S. rates could draw funds away from emerging markets, which now benefit from a wide interest rate spread. A stronger U.S. dollar also weighed on raw material prices, depressing the currencies of major commodity exporters. That hurt currencies such as copper-rich Chile's peso , while the Mexican peso followed crude prices lower. Record high U.S. crude stockpiles also helped drag oil prices toward their first weekly loss in over a month. Volumes were thin ahead of the Easter holiday, with Colombian markets closed for Holy Thursday. In Brazil, traders were also cautious ahead of expected developments in the country's worst political crisis in two decades. "We have plenty of reason to take the foot off the gas pedal," said Paulo Celso Nepomuceno, a fixed-income strategist with the Coinvalores brokerage in São Paulo. The biggest party in President Dilma Rousseff's congressional coalition could decide to jump ship next Tuesday, possibly heightening the chances of her ouster. Shares of state-controlled companies Petroleo Brasileiro SA and Banco do Brasil SA, seen as key gauges of political tensions, both fell on profit-taking after a huge rally this month. Shares of Oi SA rose after the company, Brazil's most indebted telecommunications firm, posted a widely expected quarterly loss, which was about the same as a year earlier. A source told Reuters on Thursday the company's bondholders have hired Moelis & Co to represent them in debt restructuring talks. Key Latin American stock indexes and currencies at 1545 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 812.81 -1.08 3.47 MSCI LatAm 2072.22 -1.08 14.49 Brazil Bovespa 49103.57 -1.18 13.27 Mexico IPC 45647.57 0.03 6.21 Chile IPSA 3876.47 -0.58 5.33 Chile IGPA 19016.92 -0.52 4.77 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 3.6895 -0.38 6.98 Mexico peso 17.6375 -0.28 -2.31 Chile peso 680.8 -0.41 4.25 Argentina peso (interbank) 14.4900 -0.69 -10.40 Argentina peso (parallel) 15.25 0.59 -6.43 (Reporting by Bruno Federowski; Additional reporting by Paula Laier; Editing by W Simon)
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