By Bruno Federowski
SAO PAULO, June 1 Yields paid on Brazilian
interest rate futures rose on Thursday after the central bank
said it was ready to reduce the pace of rate cuts amid a growing
Corruption allegations against President Michel Temer which
could cost him his mandate have threatened to derail his agenda
of structural reforms, which fueled bets on a rapid rate of
In a statement announcing a widely expected 100 basis-point
cut in the benchmark Selic rate after the market close on
Wednesday, the bank said a "moderate reduction" in the pace of
rate cuts would likely be appropriate at its July meeting.
Rate-future prices indicated a 20 percent chance of a lower
75 basis-point cut next month, traders said, with an 80 percent
probability of a 100 basis-point reduction. Before the
statement, investors had speculated the bank could even
accelerate rate cuts in July to a brisk 125 basis-point pace.
Most Latin American currencies strengthened for a second
day, though gains were limited by growing expectations of a U.S.
rate hike this month following stronger-than-expected jobs data.
Higher U.S. rates could dampen the appeal of
high-yielding emerging market assets, weighing on the value of
The Mexican peso and the Brazilian real both
strengthened around 0.2 percent.
A Reuters poll showed on Thursday that the Brazilian
currency is likely to weaken only slightly over the next year
despite a deepening political crisis, a sign of sustained market
confidence in the country as it finally emerges from its
Latin America's No. 1 economy expanded in the first quarter
at the fastest rate since 2013, matching analyst expectations.
Key Latin American stock indexes and currencies at 1510 GMT:
Stock indexes daily % YTD %
MSCI Emerging Markets 1009.25 0.39 16.59
MSCI LatAm 2564.66 1.28 8.19
Brazil Bovespa 63281.39 0.91 5.07
Mexico IPC 49125.89 0.69 7.63
Chile IPSA 4888.19 0.67 17.75
Chile IGPA 24505.89 0.62 18.19
Argentina MerVal 22514.31 0.74 33.08
Colombia IGBC 10685.20 0.07 5.50
Venezuela IBC 75876.83 0.79 139.32
Currencies daily % YTD %
Brazil real 3.2282 0.23 0.65
Mexico peso 18.5660 0.24 11.73
Chile peso 671.93 0.14 -0.18
Colombia peso 2886.05 1.04 4.00
Peru sol 3.267 0.09 4.50
Argentina peso (interbank) 16.0750 0.19 -1.24
Argentina peso (parallel) 16.31 0.49 3.13
(Editing by Jonathan Oatis)