EMERGING MARKETS-Brazil central bank steps in to weaken resurgent real
By Bruno Federowski SAO PAULO, April 14 (Reuters) - The Brazilian real underperformed mostly stronger Latin American currencies after the country's central bank once again heavily intervened to weaken the currency just days before a key vote on impeaching President Dilma Rousseff. Growing expectations that the lower house would vote on Sunday to impeach the leftist president drove the real to an eight-month high first on Monday and then on Wednesday. The central bank reacted by stepping up its dollar purchases in domestic futures markets, using instruments known as reverse currency swaps. The bank bought $8 billion in swaps on Tuesday, $5.25 billion on Wednesday and $4 billion on Thursday. Traders said those contracts were mostly acquired by companies seeking to exit bets on the real's weakness and unwind currency hedging. Still, the real remained close to its mid-week eight-month high as the House vote approached. Many traders hope Rousseff's ouster, if it materializes, could bring back trust in Latin America's biggest economy, currently mired in its deepest recession on record. Nearly all members of Brazil's largest political party in the lower house of Congress will back the impeachment campaign, a high-ranking party official said on Thursday. If two-thirds vote in favor, the impeachment will be sent to the Senate. If the upper house decides by a simple majority to put Rousseff on trial, she will immediately be suspended for up to six months while the Senate decides her fate, and Vice President Michel Temer will take office as acting president. Hopes of political change lifted the benchmark Bovespa stock index to a ten-month high on Wednesday, but profit-taking weighed on the index on Thursday. Shares of miners Vale SA and steelmaker Usinas Siderurgicas de Minas Gerais SA fell on lower iron ore prices after rising sharply earlier in the week. Other Latin American currencies strengthened after tame U.S. price data reinforced expectations that the Federal Reserve will proceed cautiously in raising interest rates over the following months. Key Latin American stock indexes and currencies at 1610 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 846.35 0.26 6.3 MSCI LatAm 2228.45 0.44 21.25 Brazil Bovespa 52794.86 -0.67 21.79 Mexico IPC 45486.11 0.16 5.84 Chile IPSA 3954.79 -0.06 7.46 Chile IGPA 19385.21 -0.05 6.80 Argentina MerVal 13207.12 -0.68 13.12 Colombia IGBC 10102.19 -0.15 18.19 Venezuela IBC 15670.49 0.07 7.42 Currencies daily % YTD % change change Latest Brazil real 3.5096 -0.91 12.46 Mexico peso 17.3725 0.31 -0.82 Chile peso 663.2 1.06 7.01 Colombia peso 2996.57 0.35 5.76 Peru sol 3.2641 -0.04 4.59 Argentina peso (interbank) 14.3825 0.12 -9.73 Argentina peso (parallel) 14.93 -0.07 -4.42 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier; Editing by W Simon)
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