June 15, 2018 / 9:00 PM / a month ago

EMERGING MARKETS-Brazil's real jumps, Argentine peso slumps to record low

 (Updates prices)
    By Bruno Federowski
    BRASILIA, June 15 (Reuters) - The Brazilian currency led
gains in Latin American on Friday after the central bank
announced it will extend a currency intervention plan while the
Argentine peso slumped to a record low after the resignation of
its central bank president.
    The real firmed 2.15 percent, clawing back some of
its 2.7 percent drop the previous day, the currency's worst
one-day percentage drop since May 2017. 
    The real is down about 11 percent so far this year, the
second-worst performing currency in the region behind the
Argentine peso, which slumped to a new all-time low
against the dollar on Friday after the resignation of Central
Bank President Federico Sturzenegger.
    Public support in Brazil for a nationwide truckers' strike
in the final weeks of May, which forced the government to
implement costly subsidies, cast doubt over bets that the winner
of this year's presidential election would stick to a
market-friendly platform.
    That has accentuated the effect of a global emerging markets
selloff driven by concerns over a widening U.S. fiscal deficit
and accelerating inflation, which bumped up U.S. Treasury debt
prices and weighed on demand for higher risk emerging market
assets.
    Such concerns, along with worries about a potential
U.S.-China trade war and its effect on the global economy, sent
the Bovespa down 1.54 percent, with steel companies like Cia
Siderurgica Nacional and Usiminas among
the steepest decliners.
    The market's biggest gainer was petrochemical company
Braskem, which soared 21.4 percent, helped by talks
to be acquired by larger rival LyondellBasell Industries
NV.
    The central bank has reacted to the real's volatility by
increasing sales of traditional currency swaps, which function
like future dollar sales. Late on Thursday, the bank announced
it will keep up swap sales next week, although in a smaller
volume than in this week.
    "The market is convinced that the central bank is putting
its money where its mouth is," said Ricardo Gomes, a trader at
Correparti brokerage.
    The Mexican peso, meanwhile, strengthened around
1.1 percent, bouncing back from the previous day's losses that
drove it to its weakest since January 2017, when U.S. President
Donald Trump took office.
    The peso has been hit by growing concerns that Trump could
scrap the North American Free Trade Agreement, known as NAFTA,
as well as uncertainty around Mexico's own presidential
elections.
    
  Key Latin American stock indexes & currencies at 20:05 GMT:   
 Stock indexes                                daily %     YTD %
                                    Latest     change    change
 MSCI Emerging Markets              1113.36      -1.1     -2.83
                                                       
 MSCI LatAm                         2445.28     -1.37    -12.33
 Brazil Bovespa                    70320.26     -1.54     -7.96
 Mexico IPC                        46963.91     -0.49     -4.84
 Chile IPSA                         5468.87     -1.01     -1.72
 Chile IGPA                        27650.19     -0.97     -1.18
 Argentina MerVal                  30096.33     -0.06      0.10
 Colombia IGBC                     12182.02     -0.81      7.14
 Venezuela IBC                     53459.43      8.19     68.61
                                                               
 
 (Reporting by Bruno Federowski; Editing by Will Dunham)
  
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