December 18, 2014 / 2:28 PM / 5 years ago

EMERGING MARKETS-Colombian peso skyrockets on higher oil prices, Fed

SAO PAULO, Dec 18 (Reuters) - Colombia's peso soared on
Thursday after the price of oil, the country's main export,
extended a rebound from five-year lows.
    Other Latin American currencies followed suit as an upbeat
assessment of the U.S. economy by the Federal Reserve on
Wednesday helped offset mounting concerns over the recent
decline in oil prices and a potential financial crisis in
    Colombia's peso posted its biggest intraday gain in
nearly four years, strengthening to 2,324 per dollar, a gain of
around 3 percent, before slightly paring gains to trade at
2,342, or about 2.3 percent higher than Wednesday's close.
    Fuel makes up about 69 percent of the country's merchandise
exports, according to 2013 World bank data.
    "This has to do with oil prices and the Fed, it's all
helping reduce risk aversion," said Sebastián Díaz, an analyst
with Banco de Bogotá.
    The Fed also signaled on Wednesday that it would take a
slow-going approach to rate hikes despite the strengthening U.S.
economy, reducing concerns in Latin American markets over a
sharper or sooner-than-expected interest rate rise.
    The Brazilian real strengthened for the second
straight session after hitting its weakest level against the
dollar in nearly 10 years on Tuesday.
    Traders continued to cite risks, however, over the future of
the central bank's currency intervention program, which is due
to be modified in 2015. The bank has helped support the real by
providing hedging protection to local businesses via currency
swaps, though it remains unclear how the program will be scaled
down next year.
    Chile's peso also gained for a second day despite
lower prices for copper, the country's main export.
    Equities markets moved higher, with the MSCI Latin American
stock index up 2 percent.
    Brazil's Bovespa stock index rallied for a second
day, driven by shares of state-run oil producer Petroleo
Brasileiro SA . The stock has been hammered
in recent months by an ongoing corruption investigation, but a
combination of bargain-hunting and rising oil prices have
supported the shares since Tuesday.
    Key Latin American stock indexes and currencies at 1401 GMT:
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets          935.06      1.84     -8.43
 MSCI LatAm                    2664.33      2.01     -18.4
 Brazil Bovespa               49288.71      1.18     -4.31
 Mexico IPC                          -         -   -100.00
 Chile IPSA                     3841.8      1.66      3.86
 Chile IGPA                   18822.38      1.51      3.27
 Argentina MerVal                    -         -   -100.00
 Colombia IGBC                10930.47         -    -16.38
 Peru IGRA                    14144.64     -0.03    -10.21
 Venezuela IBC                 3940.78         -     44.00
 Currencies                              daily %     YTD %
                                          change    change
 Brazil real                    2.6605      1.53    -11.42
 Mexico peso                   14.4897      0.55    -10.07
 Chile peso                        613      0.69    -14.18
 Colombia peso                  2337.2      2.63    -17.34
 Peru sol                        2.945      0.20     -5.16
 Argentina peso                 8.5575     -0.03    -24.13
 Argentina peso                  13.05      0.77    -23.37
 (Reporting by Asher Levine; Additional reporting by Nelson
Bocanegra in Bogota Editing by W Simon)
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