EMERGING MARKETS-Brazil real leads Latam gains as central bank stands back
By Bruno Federowski SAO PAULO, March 31 (Reuters) - The Brazilian real led gains among Latin American currencies on Thursday on signs that the central bank will not stand in the way of a rally driven by a shifting political outlook. Other currencies in the region also strengthened as expectations that the U.S. Federal Reserve will be slow to raise rates in coming months supported risk appetite for a third day. Brazil's currency firmed to its strongest in over six months after the central bank sold less than half the reverse currency swaps offered in an auction for the second straight day. "It looks like the central bank wants to slow the currency's rally, but not at any cost," said Glauber Romano, a trader with Intercam brokerage in São Paulo. Reverse currency swaps function like buying dollars in futures markets and are seen as a way for the central bank to limit the currency's gains. The real has rallied this month on bets that President Dilma Rousseff's potential impeachment could attract capital to the crisis-ridden economy. Many investors also bought reais seeking to influence a benchmark foreign exchange rate calculated by the central bank early in the afternoon, traders said. The month-end Ptax rate is widely used in settling foreign exchange derivatives. Brazil's benchmark Bovespa stock index fell on Thursday but neared its biggest monthly gain in nearly 15 years, supported by shares of state-controlled companies such as Petroleo Brasileiro SA and Banco do Brasil SA . The Colombian peso extended recent gains to a four-month high as traders scaled back forecasts of U.S. rate increases. Those expectations have contributed to hefty gains in high-risk assets since Tuesday, when Fed Chair Janet Yellen indicated that the bank would proceed cautiously in tightening policy. Key Latin American stock indexes and currencies at 1555 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 837.07 0.37 5.02 MSCI LatAm 2168.22 -0.53 19.12 Brazil Bovespa 50378.73 -1.7 16.21 Mexico IPC 46042.31 -0.32 7.13 Chile IPSA 3916.02 -0.77 6.41 Chile IGPA 19199.39 -0.66 5.77 Argentina MerVal 12963.32 0.7 11.03 Colombia IGBC 9710.88 -0.5 13.61 Venezuela IBC 14574.79 -1.96 -0.09 Currencies daily % YTD % change change Latest Brazil real 3.5555 1.81 11.01 Mexico peso 17.2250 0.03 0.03 Chile peso 666.8 0.96 6.43 Colombia peso 3006.5 0.25 5.41 Peru sol 3.3161 1.51 2.95 Argentina peso (interbank) 14.5850 0.24 -10.99 Argentina peso (parallel) 15.15 0.99 -5.81 (Editing by Nick Zieminski)
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