EMERGING MARKETS-Latam currencies fall sharply on global risk aversion
By Bruno Federowski SAO PAULO, April 5 (Reuters) - Latin American currencies weakened sharply on Tuesday as concerns over global growth, lower commodity prices and prospects of higher U.S. rates drove investors to seek safety in the U.S. dollar. The Mexican peso was down 1.3 percent to 17.7175 pesos per dollar and the Brazilian real slumped 1.837 percent to 3.6804 reais per dollar. International Monetary Fund Managing Director Christine Lagarde warned on Tuesday of global economic risks, calling for stronger government action. Coupled with a round of weak European economic figures, the comments boosted financial market angst toward the global growth outlook, which took its toll on commodities prices. An unexpected shortfall in U.S. demand for oil also weighed on crude prices as the chance of a coordinated output cut seemed to fade away. Traders remained skittish following mixed messages by Federal Reserve policymakers as to when the U.S. central bank will increase rates. Strong services data supported expectations that a rate hike could come sooner rather than later, reducing the allure of higher-yielding - but higher-risk - emerging market assets. "There is a distinct whiff of risk aversion lingering over the markets," analysts with Scotiabank wrote in a research note. The Brazilian real fell more than its peers as traders pared bets on President Dilma Rousseff's ouster as her efforts to stave off impeachment grew in strength. Brazil's attorney general urged a congressional committee on Monday to discard impeachment charges against the leftist president. A Brazilian Federal Supreme Court justice on Tuesday ordered Congress to start impeachment proceedings against Vice President Michel Temer. Because Temer is next in line for the presidency if Rousseff were impeached, the possibility of his ouster complicates the calculation that lawmakers must make if they vote to oust Rousseff, and deepens uncertainty over the country's leadership. Key Latin American stock indexes and currencies at 2000 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 811.28 -1.87 4.11 MSCI LatAm 2069.19 -1.9 15.27 Brazil Bovespa 49239.24 0.94 13.59 Mexico IPC 45186.01 -1.08 5.14 Chile IPSA 3920.31 -0.75 6.52 Chile IGPA 19217.35 -0.69 5.87 Argentina MerVal 12510.78 -2.13 7.16 Colombia IGBC 9707.68 -1.88 13.58 Venezuela IBC 14896.15 1.9 2.11 Currencies daily % YTD % change change Latest Brazil real 3.6804 -1.837 7.244 Mexico peso 17.7175 -1.30 -2.75 Chile peso 675.5 -0.74 5.06 Colombia peso 3084.1 -0.68 2.76 Peru sol 3.3631 -0.42 1.51 Argentina peso (interbank) 14.6800 0.34 -11.56 Argentina peso (parallel) 15.05 0.93 -5.18 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier; Editing by David Gregorio)
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