April 14, 2016 / 4:43 PM / in 2 years

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
    Key Latin American stock indexes and currencies at 1610 GMT:
 Stock indexes                                daily %   YTD %
                                               change  change
 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
 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)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below