April 29, 2016 / 11:07 PM / 2 years ago

EMERGING MARKETS-Brazil real hits 8-month high as Latam currencies rally

SAO PAULO, April 29 (Reuters) - Brazil's real surged to an
eight-month high on Friday, prompting the country's central bank
to step up intervention to derail the rally, while Colombia and
Mexico's pesos also hit their strongest levels this year.
    Dovish signs from the U.S. Federal Reserve have fueled
strong gains in Latin American currencies this week.
    The dollar index, a measure of the greenback's value
against a basket of currencies, was on course for its third
consecutive monthly decline for the first time in five years. 
    Investors have pared their bets on multiple interest rate
hikes this year after the U.S. economy nearly ground to a halt
in the first quarter. This helped to drive demand for
higher-yielding emerging market assets.  
    Brazil's central bank, in its first intervention in a week,
offered up to $2.5 billion in reverse currency swaps in three
auctions after the real hit 3.45 per dollar.
    Other Latin American currencies also strengthened. The
Mexican peso rose more than 0.5 percent to a four-month
high on stronger-than-expected first-quarter preliminary GDP
data for the region's No. 2 economy. 
    "The dollar trend remains bearish. The (Brazilian) central
bank came in and it continued to fall (against the real)
anyway," said Glauber Romano, trader at brokerage Intercam.
    Colombia's peso jumped nearly 1 percent to close at
its strongest since early November. 
    After the market close, Colombia's central bank unexpectedly
increased its benchmark interest rate by half a percentage point
to stem rising inflation. 
    Latam stock markets were also firmer, with the broader MSCI
Latin American stock index up 0.4 percent, as
commodities prices gained.
    Shares of Mexican media group Televisa SAB 
jumped more than 8 percent after the company reported solid
sales growth despite a 59-percent drop in first-quarter profit.
    A sharp drop in shares of planemaker Embraer SA 
capped gains in Brazilian stocks. Shares of the world's
third-largest commercial jet maker fell nearly 4 percent after a
decline in profit margins in the first quarter. 

    Key Latin American stock indexes and currencies at 2115 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets               840.19    -0.46      5.8
 MSCI LatAm                         2292.06     0.36    25.26
 Brazil Bovespa                    53910.51    -0.74    24.36
 Mexico IPC                        45784.77     0.56     6.53
 Chile IPSA                         4002.07    -0.51     8.75
 Chile IGPA                        19655.14    -0.42     8.28
 Argentina MerVal                  13724.07    -0.11    17.55
 Colombia IGBC                      9961.63     -1.2    16.55
 Venezuela IBC                     15670.96      0.1     7.42
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         3.4382     1.68    14.80
 Mexico peso                          17.17     0.54     0.35
 Chile peso                             660     0.08     7.53
 Colombia peso                      2846.05     0.98    11.36
 Peru sol                             3.287    -0.33     3.86
 Argentina peso (interbank)         14.2500     0.70    -8.89
 Argentina peso (parallel)            14.61     0.68    -2.33
 (Reporting by Flavia Bohone; Writing by Silvio Cascione;
Editing by Richard Chang)
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