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EMERGING MARKETS-Brazil stocks, currency rise ahead of central bank rate cut
September 6, 2017 / 11:21 PM / 17 days ago

EMERGING MARKETS-Brazil stocks, currency rise ahead of central bank rate cut

 (Adds central bank rate cut, final prices)
    By Bruno Federowski
    SAO PAULO, Sept 6 (Reuters) - Brazil's stocks and currency
rallied on Wednesday before the central bank cut interest rates
to a four-year low after the market closed, seeking to spur an
incipient economic recovery.
    The central bank slashed its benchmark Selic rate by 100
basis points to 8.25 percent, but signaled the pace of monetary
easing would probably slow next month.
    Earlier, the market rallied as Brazil's Congress cleared two
key fiscal bills, adding to investor optimism over President
Michel Temer's ability to pass market-friendly reforms.
    Mexico's peso, meanwhile, rose by 0.6 percent against the
dollar amid general weakness in the greenback, while the S&P/BMV
IPC stock index strengthened 0.43 percent.
    "Today's advance can be put down to adjustments in some
firms whose values had lost ground and were looking attractive,"
said Gerardo Copca, a strategist at Metanalisis consultancy.
    Late on Tuesday, Brazilian lawmakers approved softened
budget targets for 2017 and 2018, as well as a bill setting a
market-based benchmark rate for state development bank BNDES
that will reduce subsidies in years to come.

    The measures are central to Temer's efforts to limit growth
of public debt without implementing further tax hikes. Investors
hope that will boost long-term growth in Brazil as the economy
emerges from the deepest recession in a century.
    Hopes of increased lawmaker support for his platform grew
this week after the country's top prosecutor threatened to
partially revoke a plea deal that had supported corruption
charges against the center-right president.
    The Brazilian real strengthened 0.55 percent on
Wednesday as the cost of insuring against a Brazilian sovereign
default hit a new two-year low. The country's
benchmark stock index neared a record high. 
    Supporting demand for Brazilian shares was news the Finance
Ministry was analyzing the implications of relinquishing veto
rights on certain strategic decisions in a few companies, which
could pare back the state's role in the economy.
    Shares of state-controlled power utility Centrais Elétricas
Brasileiras SA, which the government plans to
privatize, rose 2.3 percent. Planemaker Embraer SA,
which could be targeted by the measure, rose 3.2 percent, also
lifted by a $1.1 billion firm order from SkyWest.
    The Chilean peso closed up 0.55 percent to the
highest since May 2015, tracking a rally in prices of copper, a
key export. The currency has strengthened sharply in recent
weeks, but some traders believe the move may be overstretched.
    
    Key Latin American stock indexes and currencies at 2230 GMT:
 Stock indexes                                daily %    YTD %
                                    Latest     change   change
 MSCI Emerging Markets              1083.18     -0.16    25.62
                                                       
 MSCI LatAm                         2939.30      1.09    25.58
 Brazil Bovespa                    73412.41      1.75    21.89
 Mexico S&P/BVM IPC                50515.60      0.43    10.68
                                                       
 Chile IPSA                         5080.59     -1.02    22.38
 Chile IGPA                        25416.50     -0.94    22.58
 Argentina MerVal                  24164.85      0.58    42.84
 Colombia IGBC                     11219.89     -0.13    11.39
 Venezuela IBC                    266926.16     -1.06   741.90
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                     Latest            
 Brazil real                         3.1021      0.55     4.74
                                                       
 Mexico peso                        17.7860      0.61    16.63
                                                       
 Chile peso                           618.3      0.55     8.49
 Colombia peso                       2913.7      0.69     3.01
 Peru sol                             3.235      0.03     5.53
                                                       
 Argentina peso (interbank)         17.2050      0.17    -7.73
                                                       
 Argentina peso (parallel)            17.90      0.22    -6.03
                                                       
 
 (Additional reporting by Sheky Espejo in Mexico City; Editing
by Chizu Nomiyama and Jonathan Oatis)
  

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