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EMERGING MARKETS-Brazil real up for 8th day ahead of Fed decision
December 14, 2016 / 3:02 PM / a year ago

EMERGING MARKETS-Brazil real up for 8th day ahead of Fed decision

By Bruno Federowski
    SAO PAULO, Dec 14 (Reuters) - The Brazilian real
strengthened for an eighth day on Wednesday ahead of the U.S.
Federal Reserve policy decision, supported by growing bets that
the government will manage to swiftly pass austerity measures.
    The Senate approved on Tuesday a constitutional amendment
limiting growth of public spending for the next 20 years, a
victory for President Michel Temer's efforts to curb debt.
    A batch of corruption accusations against senior members of
Temer's government, including Temer himself, had stoked concerns
of delays in the approval of fiscal austerity measures.
    Also helping lift the real were expectations of corporate
inflows into Brazil after the country's watchdog approved a
transaction transferring control of the stakes that Camargo
Corrêa SA, pension fund Previ and Energia São Paulo FIA had in
CPFL Energia SA to State Grid Corp of China.
    The real's recent rally allowed the central bank to reduce
its intervention after selling traditional currency swaps, which
function like dollar sales to investors for future delivery,
daily since Dec. 1.
    Other Latin American currencies seesawed before the Fed's
decision later on Wednesday. Traders say an interest rate
increase is fully priced-in, but doubt remains over whether the
U.S. central bank will signal additional hikes through the
coming months.
    Key Latin American stock indexes and currencies at 1455 GMT:
 Stock indexes                                daily %   YTD %
                                     Latest    change  change
 MSCI Emerging Markets                874.86    -0.27   10.46
 MSCI LatAm                          2323.24    -0.49   27.59
 Brazil Bovespa                     58769.33    -0.86   35.57
 Mexico IPC                         46598.74    -0.58    8.43
 Chile IPSA                          4261.89    -0.25   15.81
 Chile IGPA                         21274.88    -0.24   17.21
 Argentina MerVal                   17185.76    -0.06   47.20
 Colombia IGBC                       9945.90    -0.33   16.36
 Venezuela IBC                      34736.05    -0.73  138.11
 Currencies                                   daily %   YTD %
                                               change  change
 Brazil real                          3.3166     0.27   19.01
 Mexico peso                         20.2265     0.28  -14.81
 Chile peso                            655.1    -0.66    8.33
 Colombia peso                       2968.39     0.02    6.77
 Peru sol                              3.394     0.00    0.59
 Argentina peso (interbank)          15.8100     1.00  -17.88
 Argentina peso (parallel)             16.34     0.12  -12.67

 (Reporting by Bruno Federowski; Editing by Nick Zieminski)

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