EMERGING MARKETS-Real jumps on China reform push, swap rollover bets

Mon Nov 18, 2013 11:40am EST

RIO DE JANEIRO, Nov 18 (Reuters) - The Brazilian real
rallied 2 percent on Monday, greatly outperforming its Latin
American peers, as markets welcomed China's ambitious reform
push and traders bet that Brazilian policymakers will roll over
all of the currency swaps that expire early in December.
    Other regional currencies also rose after China unveiled its
boldest set of economic and social reforms in nearly three
decades, fueling optimism that the largest consumer of Latin
American commodity exports will achieve sustained economic
growth during the next several years. 
    "Investors approved of the Chinese measures as they see them
as a way for the country's economy to become more competitive,
which will favor commodity-related currencies," said Luciano
Rostagno, chief strategist of Mizuho bank in Sao Paulo. 
    * Brazil's real  gained 2 percent to 2.2755 per
dollar as traders bet the central bank will roll over all of the
$10.1 billion worth of currency swaps that mature on December 2.
The bank has been regularly selling those contracts to provide
investors with protection against a possible depreciation of the
real.
    * Brazilian policymakers later on Monday will offer 20,000
currency swaps worth about $1 billion in the fourth auction of
that type to roll over the maturing swaps. "It's already
expected that the central bank will roll over all of the
maturities and that is providing some relief to the exchange
rate," said Jaime Ferreira, currency desk manager at Intercam, a
brokerage in Sao Paulo.
    * Chile's peso rose 0.7 percent after Michelle
Bachelet won the first round of presidential elections but
looked set to face an uphill battle to push through an ambitious
reform program that includes raising taxes.   
    * Bachelet's push for higher taxes has weighed on the peso
in the past few days. But local traders said Monday's gains were
mostly driven by external markets as the election's result was
broadly in line with expectations.
    * Mexico's peso  firmed 0.4 percent in
overseas trading as a local holiday kept Mexican traders out of
the market.

    
 Latin American currencies at 1600 GMT
    
 Currencies                       daily %    YTD %
                                   change   change
                                           
                          Latest           
 Brazil real              2.2755     2.00   -10.35
                                           
 Mexico peso             12.8775     0.36    -0.10
                                           
 Chile peso             517.4000     0.70    -7.48
                                           
 Colombia peso          1917.550    -0.02    -7.90
                               0           
 Peru sol                 2.7990     0.04    -8.86
                                           
 Argentina peso           5.9950     0.00   -18.06

 Argentina peso           9.8500     0.91   -31.17
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A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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