By Bruno Federowski
SAO PAULO, Feb 23 Yields on Brazilian interest
rate futures narrowed on Thursday after the country's central
bank signaled it could accelerate the pace of cuts to lift the
economy from a deep recession.
After the market close on Wednesday, central bank
policymakers voted to cut the benchmark Selic rate by 75 basis
points for the second straight time to 12.25 percent.
A minority of traders had bet on a steeper cut of 100 basis
points after several reports showed a rapid drop in inflation
In a statement following the meeting, the bank said the
future pace of loosening will hinge on the evolution of economic
activity and inflation.
Traders said rate futures indicated a 40 percent probability
of a 100-basis-point cut in the central bank's April meeting,
with a 60 percent chance of a 75-basis-point reduction.
Despite expectations of lower interest rates ahead, the
Brazilian real strengthened 0.2 percent, tracking
stronger demand for emerging market currencies.
Traders said U.S. data on Thursday showing a slight rise in
weekly jobless claims reinforced expectations the Federal
Reserve will increase interest rates at a gradual pace
throughout the year. The Fed failed on Wednesday to provide a
clear signal of a rate hike in March in the minutes from its
latest policy meeting.
A gradual pace of U.S. rate tightening would be good news
for emerging market assets, which tend to lure investors seeking
Assets from oil-exporting economies, such as the Colombian
and Mexican pesos, were the best performers as
crude futures rose after a surprising drop in U.S. inventories.
Key Latin American stock indexes and currencies at 1440 GMT:
Stock indexes daily % YTD %
MSCI Emerging Markets 956.32 0.56 10.28
MSCI LatAm 2715.10 1.32 14.48
Brazil Bovespa 69303.63 1.04 15.07
Mexico IPC 47357.68 0.34 3.76
Chile IPSA 4378.44 0.06 5.47
Chile IGPA 21882.95 0.06 5.54
Argentina MerVal 20123.69 1.04 18.95
Colombia IGBC 9934.12 0.05 -1.92
Venezuela IBC 34809.74 -0.17 9.79
Currencies daily % YTD %
Brazil real 3.0622 0.21 6.11
Mexico peso 19.6680 1.22 5.47
Chile peso 639.7 0.34 4.85
Colombia peso 2866.5 1.06 4.71
Peru sol 3.236 0.28 5.50
Argentina peso (interbank) 15.5600 0.10 2.02
Argentina peso (parallel) 16.32 0.18 3.06
(Reporting by Bruno Federowski; Editing by Paul Simao)