EMERGING MARKETS-Latam assets extend gains on Fed caution
(Adds details on currencies, updates prices) By Bruno Federowski SAO PAULO, March 30 (Reuters) - Most Latin American currencies and markets 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 on Tuesday said the U.S. central bank should proceed cautiously in tightening policy, calming investors' fears that she would take a more hawkish tone. Lower U.S. rates for longer boost demand for emerging market assets such as the Mexican peso, which rose 0.7 percent to 17.23 per dollar, wiping out its losses for the year. The peso in Colombia rose 1.4 percent to 3,013.9 per dollar, its highest in more than four months, while the country's benchmark stock index jumped 1.7 percent, its biggest rise in nearly a month. Before Yellen's comments, many investors believed she would follow a series of Fed policymakers who endorsed a trajectory of at least two rate increases this year. But Yellen instead emphasized threats to the world's biggest economy, including low oil prices and concerns about China. 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. The Brazilian real was also lifted after the central bank in its auction decided to sell only some reverse currency swaps, which function like buying dollars in futures markets. The real rose 0.5 percent, staying close to seven-month highs hit over the last two weeks. The country's benchmark Bovespa stock index also gained, supported by a rise in shares of state-controlled oil company Petroleo Brasileiro SA. Key Latin American stock indexes and currencies at 2100 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 833.98 2.35 5.02 MSCI LatAm 2179.68 2.22 19.12 Brazil Bovespa 51248.92 0.18 18.22 Mexico IPC 46191.51 0.64 7.48 Chile IPSA 3946.47 0.74 7.23 Chile IGPA 19326.22 0.7 6.47 Argentina MerVal 12872.90 -0.43 10.26 Colombia IGBC 9759.46 1.67 14.18 Venezuela IBC 14865.47 0.97 1.90 Currencies daily % YTD % change change Latest Brazil real 3.6197 0.47 8.29 Mexico peso 17.23 0.68 0.00 Chile peso 673.2 1.22 5.14 Colombia peso 3014 0.00 4.90 Peru sol 3.3661 0.23 1.40 Argentina peso (interbank) 14.5900 0.55 -12.38 Argentina peso (parallel) 15.25 0.91 -6.87 (Additional reporting by Paula Arend Laier and Anna Yukhananov; Editing by James Dalgleish and Andrew Hay)
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