EMERGING MARKETS-LatAm currencies rebound after selloff, except Brazil
By Bruno Federowski BRASILIA, April 24 (Reuters) - Most Latin American currencies bounced back on Tuesday from a sell-off as U.S. bond yields steadied, but political uncertainty drove the Brazilian real to its weakest level in 16 months. Emerging market currencies had plummeted on Monday as U.S. Treasury yields shot up to a four-year high, lifted by expectations of a wider fiscal deficit and faster inflation. After briefly breaching the 3 percent milestone early on Tuesday, yields on 10-year U.S. bonds retraced some of those gains, rekindling appetite for battered high-yield assets. The Chilean peso firmed 0.4 percent, also supported by rising prices of copper. The Mexican and Colombian pesos, which had led losses on Monday on the heels of a crude sell-off, strengthened 0.5 percent and 1 percent respectively as oil futures rose above $75 a barrel. Yet analysts at Guide Investimentos cast doubt over the rebound, saying an uncertain outlook is likely to keep volatility high in coming days. "This might be a one-off, transitory recovery in asset prices," they wrote in a client note. The Brazilian real weakened 0.8 percent, extending a recent stretch of underperformance as traders fretted over the most uncertain presidential election in decades. Some investors had predicted that the arrest of former President Luiz Inácio Lula da Silva, who was leading polls and had rallied against the current government's austerity platform, would usher in the ascent of more market-friendly candidates. But recent polls have showed the Brazilian electorate highly fragmented and unsatisfied with the likely candidates in the October election, raising doubts over efforts to curb a growing budget deficit. "Our bullish story was mostly based on (recovering) confidence ... but the election process is not moving in the expected direction," strategists at Santander wrote in a client note. The benchmark Bovespa stock index, however, rose 0.3 percent, with shares of Banco Santander Brasil SA and Cosan SA Indústria e Comércio leading gains. Cosan shares rallied after Raízen Combustíveis SA, a joint venture between Cosan and Royal Dutch Shell Plc, agreed to purchase downstream assets in Argentina from Shell for $950 million. Meanwhile, traders bet Santander Brasil will report stronger-than-expected results later on Tuesday after Spanish parent company Banco Santander SA unveiled a 10 percent rise in first-quarter net income. Key Latin American stock indexes and currencies at 1525 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1155.38 -0.25 -0.02 MSCI LatAm 2987.20 -0.72 6.39 Brazil Bovespa 85858.36 0.3 12.38 Mexico IPC 48135.47 -0.63 -2.47 Chile IPSA 5691.58 -0.23 2.28 Chile IGPA 28625.03 -0.16 2.30 Argentina MerVal 31112.71 0.55 3.48 Colombia IGBC 12471.86 -0.37 9.68 Currencies daily % YTD % change change Latest Brazil real 3.4783 -0.76 -4.74 Mexico peso 18.8560 0.45 4.47 Chile peso 600.1 0.40 2.42 Colombia peso 2782.98 1.04 7.15 Peru sol 3.235 -0.03 0.06 Argentina peso (interbank) 20.2500 0.05 -8.15 Argentina peso (parallel) 20.5 0.34 -6.20 (Reporting by Bruno Federowski; editing by Jonathan Oatis)
