EMERGING MARKETS-Latam currencies extend gains on Fed caution
By Bruno Federowski SAO PAULO, March 30 (Reuters) - Most Latin American currencies strengthened for a second day on Wednesday as traders bet the Federal Reserve could take longer than expected to increase U.S. interest rates. Fed Chair Janet Yellen said on Tuesday the U.S. central bank should proceed cautiously in tightening policy. Many investors had feared she could take a more hawkish tone after a series of Fed policymakers endorsed a trajectory of at least two rate increases this year. Fed funds futures implied traders now expected the Fed to stand pat until the final quarter of 2016. Brazilian politics remained under the spotlight after the country's biggest political party split with the governing coalition, sharply raising the chances of President Dilma Rousseff's ouster. "The chances of impeachment for Rousseff are about 90 percent. One way or another, the game is pretty much up for her," Edwin Gutierrez, head of emerging market sovereign debt at Aberdeen Asset Management, wrote in a client note. Many traders believe a change in government could help rekindle investor trust in Latin America's biggest economy. Rousseff's popularity remained close to historic lows, a poll showed on Wednesday. A central bank decision to sell only some of the reverse currency swaps, which function like buying dollars in futures markets, offered in an auction also helped lift the Brazilian real. The country's benchmark Bovespa stock index rose, supported by a rise in shares of state-controlled oil company Petroleo Brasileiro SA. Shares of Gol Linhas Aereas slumped after the airline posted a heavy fourth-quarter loss, weighed by weak demand amid a deep economic crisis and high costs due to a weaker local currency. Key Latin American stock indexes and currencies at 1530 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 835.55 2.54 2.61 MSCI LatAm 2189.73 2.69 16.54 Brazil Bovespa 52020.49 1.69 20.00 Mexico IPC 46228.24 0.72 7.56 Chile IPSA 3940.94 0.59 7.08 Chile IGPA 19296.34 0.55 6.31 Argentina MerVal 13145.67 1.67 12.60 Colombia IGBC 9702.62 1.08 13.52 Venezuela IBC 14836.63 0.77 1.70 Currencies daily % YTD % change change Latest Brazil real 3.6115 0.70 9.29 Mexico peso 17.2160 0.77 0.08 Chile peso 673.3 1.22 5.41 Colombia peso 3026.1 1.00 4.73 Peru sol 3.365 0.27 1.46 Argentina peso (interbank) 14.6000 0.48 -11.08 Argentina peso (parallel) 15.28 0.72 -6.61 (Additional reporting by Paula Arend Laier; Editing by James Dalgleish)
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