April 14, 2016 / 8:49 PM / 2 years ago

EMERGING MARKETS-Brazil real firms on impeachment bets despite intervention

By Bruno Federowski
    SAO PAULO, April 14 (Reuters) - The Brazilian real edged
stronger on Thursday to an eight-month high, shaking off the
effects of central bank intervention amid growing bets President
Dilma Rousseff could soon be impeached, paving the way to a more
market-friendly government.
    The country's central bank once again intervened heavily to
try to weaken the currency by stepping up its dollar purchases
in domestic futures markets, using instruments known as reverse
currency swaps. 
    That intervention drove the real sharply weaker early in the
session, but the currency clawed its way back to end the session
stronger on growing expectations that the lower house of
Congress would vote on Sunday to impeach the leftist president. 
    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.
    Traders expect 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. 
    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.
    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 2030 GMT:
 Stock indexes                           daily %    YTD %
                                Latest    change   change
 MSCI Emerging Markets           845.45     0.15     6.46
 MSCI LatAm                     2219.21     0.02    21.28
 Brazil Bovespa                52411.02    -1.39    20.90
 Mexico IPC                    45403.54    -0.02     5.64
 Chile IPSA                     3950.56    -0.17     7.35
 Chile IGPA                    19367.68    -0.14     6.70
 Argentina MerVal              13212.49    -0.64    13.17
 Colombia IGBC                 10084.14    -0.33    17.98
 Venezuela IBC                 15659.55        0     7.34
 Currencies                              daily %    YTD %
                                          change   change
 Brazil real                     3.4745     0.09    13.60
 Mexico peso                    17.4085     0.11    -1.03
 Chile peso                       663.8     0.96     6.91
 Colombia peso                   2993.2     0.47     5.88
 Peru sol                         3.273    -0.31     4.31
 Argentina peso (interbank)     14.3100     0.63    -9.28
 Argentina peso (parallel)        14.93    -0.07    -4.42
 (Reporting by Bruno Federowski; Additional reporting by Paula
Arend Laier; Editing by W Simon and Meredith Mazzilli)
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