May 22, 2018 / 9:39 PM / 3 months ago

EMERGING MARKETS-Brazil currency boosted by rate view, Latam FX gains

 (Updates prices)
    SAO PAULO, May 22 (Reuters) - Brazil's real jumped more than
1 percent on Tuesday after central bank minutes reinforced
investors' beliefs that the country's deepest monetary easing
cycle in a decade was over, while other Latin American
currencies also gained. 
    Brazil's central bank unexpectedly kept the benchmark Selic
rate at 6.50 percent last week, defying market expectations of a
25-basis-point cut.
    In minutes of that meeting released early Tuesday, the bank
indicated that the recent strength of the U.S. dollar had
reduced the likelihood of Brazilian inflation remaining below
the official target for the foreseeable future. The body also
indicated it would likely keep the rate steady in the near
future.
    "In the central bank's argument, they say that inflation
expectations have become unanchored toward the upside, which is
to say that it's no longer necessary to cut the Selic rate,"
said Jose Francisco Gonçalves, head economist at Banco Fator in
Sao Paulo.
    The real bid 1.2 percent stronger, following gains on
Monday after the central bank almost quadrupled the value of its
currency swap program. The real had previously weathered a rough
streak, hitting its lowest level in two years on Friday.

    Elsewhere in Latin America, Chile's peso outdid the
real to rise more than 2 percent, following global copper prices
 that jumped more than 1 percent as fears of a U.S.-China
trade war appeared to fade.
    Mexico's peso rebounded slightly on Tuesday, benefiting from
the weak greenback, a day after blowing past the 20 per dollar
mark to a more than one-year low. 
    Equities markets were relatively flat across the region with
the exception of Brazil's benchmark Bovespa index, which
rose 1.31 percent. 
    Gainers included electricity utility Cia Energetica de Minas
Gerais SA, whose shares rose 5 percent after the
nation's electricity regulator approved a power tariff hike.
    Mexico's benchmark IPC index gained 0.65 percent,
rebounding from a nearly 1-1/2-year low on a wave of
opportunistic buying after weeks of gradual weakening.
    
Key Latin American stock indexes and currencies at 2024 GMT:
    
 Stock indexes               Latest          Daily   YTD pct
                                               pct    change
                                            change  
 MSCI Emerging Markets          1,142.05      0.49     -1.42
                                                    
 MSCI LatAm                     2,743.35      2.02        -3
 Brazil Bovespa                82,738.88      1.13      8.29
 Mexico IPC                    45,600.87      0.65     -7.61
 Chile IPSA                     5,651.10      -0.3      1.55
 Chile IGPA                    28,540.84     -0.48      2.00
 Argentina MerVal              30,973.72     -2.08      3.02
 Colombia IGBC                 12,130.18      0.38      6.68
 Venezuela IBC                 22,988.86      0.85   1719.98
                                                            
 Currencies                       Latest     Daily   YTD pct
                                               pct    change
                                            change  
 Brazil real                      3.6440       1.2     -9.98
 Mexico peso                     19.7500      0.33     -0.26
 Chile peso                       623.95      2.01     -1.49
 Colombia peso                  2,853.05      0.77      4.52
 Peru sol                          3.271      0.37     -1.04
 Argentina peso (interbank)      24.2750      0.47    -23.38
                                                    
 Argentina peso (parallel)         25.35      0.20    -24.14
                                                    
 
 (Reporting by Gram Slattery, Claudia Violante and Daina Beth
Solomon; Editing by Cynthia Osterman)
  
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