January 2, 2019 / 3:05 PM / 9 months ago

EMERGING MARKETS-Brazil's real firms against dollar, bucking Latam trend

    By Aaron Saldanha
    Jan 2 (Reuters) - Brazil's real strengthened against the
U.S. dollar on Wednesday, a day after new President Jair
Bolsonaro took power, on hopes of reform to the pension system
of Latin America's top economy, while most other Latin American
currencies softened against the greenback. 
    Brazil's new economy minister, Paulo Guedes, drafted a
temporary executive decree for a pension reform that could save
up to 50 billion reais ($13 billion) over the next decade, a
report said.
    "Strong opposition in congress is expected ... The strategy
is to roll out a package of changes which don't require
congressional approval," Citigroup head of emerging market
strategy Dirk Willer and emerging markets FX strategist Kenneth
Lam wrote in a note.
    The news fed optimism in Brazil's securities markets. Sao
Paulo's Bovespa stocks benchmark was trading up 0.4
percent on Wednesday, benefiting from gains in most sectors. 
    The real strengthened about 0.8 percent, while yields
on local 10-year bonds neared a six-year low during
the session. They last yielded 9.22 percent.
    On Tuesday, former army captain-turned-lawmaker Bolsonaro
promised to open foreign markets and enact reforms to reduce a
yawning budget deficit, putting government accounts on a
sustainable path.
    Factory activity in China - an important destination for
Brazil's resources exports - contracted for the first time in
over two years in December.
    Mexico's peso was little changed against the firm
dollar, while the currencies of Chile and Colombia
down 0.4 percent and 0.5 percent, respectively. Chilean stocks
 dipped 0.8 percent.
    Argentina's peso weakened about 1.3 percent against
the greenback.   
    Key Latin American stock indexes and currencies at 1413 GMT
 Stock indexes                              daily %
                                Latest       change
 MSCI Emerging Markets             950.47      -1.6
 MSCI LatAm                       2586.97      0.82
 Brazil Bovespa                  88244.88      0.41
 Mexico IPC                             -         -
 Chile IPSA                       5066.74     -0.76
 Argentina MerVal                       -         -
 Colombia IGBC                          -         -
 Currencies                                 daily %
 Brazil real                       3.8439      0.81
 Mexico peso                      19.6480     -0.03
 Chile peso                         696.3     -0.37
 Colombia peso                       3261     -0.49
 Peru sol                           3.373     -0.15
 Argentina peso (interbank)       38.0000     -0.79

($1 = 3.8446 reais)

 (Reporting by Aaron Saldanha in Bengaluru)
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