October 15, 2015 / 7:48 PM / 2 years ago

EMERGING MARKETS-Brazil real pressured by Fitch's sovereign downgrade

By Walter Brandimarte
    SAO PAULO, Oct 15 (Reuters) - The Brazilian real
underperformed other Latin American currencies on Thursday after
Fitch Ratings downgraded the country and said its investment
grade was at risk.
    The real weakened as much as 1 percent as investors
feared Fitch may become the second major rating agency to cut
Brazil's rating to junk level in coming months. 
    It later erased losses to rise 0.3 percent as investors'
appetite for emerging markets remained steady, supported by
recent data that suggested the U.S. Federal Reserve may refrain
from raising rates this year.
    Other Latin American currencies posted larger gains, with
the Mexican peso rising 0.6 percent and the Chilean peso
climbing 1.1 percent.
    "Fitch's decision to lower Brazil's sovereign credit rating
was largely expected, as reflected in a relatively muted
reaction in the currency market," said Michael Henderson, lead
economist at risk analysis company Verisk Maplecroft.
    He warned, however, that the real could weaken back toward
the level of 4 real per dollar if opposition lawmakers garner
enough political support to start an impeachment process against
President Dilma Rousseff, who they blame for accounting
irregularities.

    Key Latin American stock indexes and currencies at 1940 GMT:
    
 Stock indexes                                daily %    YTD %
                                               change   change
                                   Latest              
 MSCI Emerging Markets                867.94     2.18   -11.18
 MSCI LatAm                           2050.8     1.67   -26.05
 Brazil Bovespa                     47018.95     0.66    -5.98
 Mexico IPC                         44099.83     0.08     2.21
 Chile IPSA                          3808.45     0.39    -1.10
 Chile IGPA                         18666.02     0.34    -1.08
 Argentina MerVal                  11108.479     2.16    29.48
 Colombia IGBC                       9591.09    -0.46   -17.56
 Venezuela IBC                      12019.64     0.44   211.49
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                      Latest           
 Brazil real                          3.7998     0.32   -30.06
 Mexico peso                         16.3735     0.59    -9.95
 Chile peso                           673.75     1.08   -10.00
 Colombia peso                          2891     1.21   -17.40
 Peru sol                             3.2331     0.18    -7.86
 Argentina peso (interbank)           9.4800    -0.03    -9.81
                                                       
 Argentina peso (parallel)             15.78     0.25   -11.28
                                                       
 
    

 (Reporting by Walter Brandimarte; Editing by Chris Reese)

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