EMERGING MARKETS-Brazil currency drops on local political woes
(Updates with planning minister stepping down) By Bruno Federowski SAO PAULO, May 23 (Reuters) - Brazil's currency fell sharply on Monday following the resignation of a high-ranking minister, in charge of securing legislative support for fiscal austerity measures, who had sought to obstruct a sweeping corruption probe. Mexico's peso also dropped more than 1 percent in afternoon trading after hawkish comments from U.S. Federal Reserve policymakers reinforced expectations for a U.S. interest rate hike in June or July. Traders often treat Mexico's currency as a proxy for other emerging markets. But Argentina's currency outperformed its peers in the region, touching its highest in nearly four months, amid renewed inflows of dollars from the country's agricultural exporters. The drop in the Brazilian real came after excerpts from taped conversations showed the country's Planning Minister Romero Jucá agreed to a "national pact" to weaken Brazil's biggest ever corruption investigation. The real dropped 1.8 percent, leading the losses among Latin American currencies. Jucá said he would temporarily step down after his comments became public, dealing a huge blow to Interim President Michel Temer, who had counted on the experienced senator to secure legislative support for key economic measures and reforms. "To lose a minister this soon would spell very bad news for this administration's credibility," Arlindo Sá, a derivatives broker with Ativa brokerage in São Paulo, said earlier on Monday, before Juca stepped down. Brazil's Finance Minister Henrique Meirelles said the government will announce short- and long-term measures on Tuesday to tackle growing debt and limit spending. Shares of Petrobras fell more than 4 percent, tracking a decline in oil prices, which weighed on the country's benchmark Bovespa stock index. Key Latin American stock indexes and currencies at 1957 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 788.78 0.45 -1.12 MSCI LatAm 2,053.19 -1.27 13.65 Brazil Bovespa 49,195.55 -1.06 13.48 Mexico IPC 45,234.76 0.17 5.25 Chile IPSA 3,946.26 0.16 7.23 Chile IGPA 19,435.95 0.16 7.08 Argentina MerVal 12,489.46 -1.31 6.97 Colombia IGBC 9,820.99 0.2 14.90 Venezuela IBC 15,269.06 -1.29 4.67 Currencies Latest Daily YTD pct pct change change Brazil real 3.5856 -1.96 9.16 Mexico peso 18.5165 -1.00 -7.47 Chile peso 694.07 -0.42 2.20 Colombia peso 3,060.2 -0.37 3.44 Peru sol 3.344 -0.36 2.05 Argentina peso (interbank) 13.9900 0.36 -7.76 Argentina peso (parallel) 14.62 0.34 -2.45 (Additional reporting by Paula Arend Laier and Anna Yukhananov; Editing by Diane Craft and Alistair Bell)
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