EMERGING MARKETS-Latam stocks up after Yellen; Kazakhstan devalues tenge
(Updates prices, adds analyst quotes, Argentina, Chile, Mexico) RIO DE JANEIRO/LONDON, Feb 11 (Reuters) - Latin American stocks followed U.S. markets higher on Tuesday after U.S. Federal Reserve Chair Janet Yellen reassured investors that current monetary policy would remain in place. Elsewhere, the Kazakh currency, the tenge, lost almost a fifth of its value after the central bank devalued it, while the South African rand jumped following better-than-expected manufacturing and employment data. In her first public comments as Fed chief, Yellen said the central bank would "likely reduce the pace of asset purchases in further measured steps at future meetings" if economic data broadly supports policymakers' expectation of improved labor markets and a rise in inflation. Yellen's statements calmed lingering uncertainty over a potential change in the Fed's attitude toward the stimulus program under its new chief, while assuring investors that policy would remain flexible should the economy falter. Latin American stocks jumped 1.85 percent in late afternoon trading, with Brazil's benchmark Bovespa index up 1.58 percent, led mostly by commodities exporters. "Rising stocks and emerging market currencies today show that bad economic news, or not-great news, will help lead to the injection of resources in the U.S. and global markets via treasuries," wrote Andre Perfeito, chief economist at Gradual Investimentos in Sao Paulo, citing Yellen's statements. Mexico's benchmark IPC stock index had its biggest jump in more than a month, driven by a nearly 3 percent gain in heavily weighted telecommunications firm America Movil , controlled by tycoon Carlos Slim. The company was expected to release fourth-quarter results after the market close. Chile's IPSA stock index had its biggest rise in more than four months, while the peso strengthened 0.23 percent. "We had data that showed that the AFPs (Chile's private pension funds) are starting to buy in the local market. That gives the market a positive sign," said Alfredo Parra, analyst at Santiago-based brokerage EuroAmerica. The AFPs are Chile's largest institutional investors, managing some $156.8 billion in assets at the end of January. Mexico's peso and Brazil's real also strengthened about 0.3 percent each. Argentina's peso weakened, however, after a six-day rally driven by a central bank rule change last week limiting the net foreign currency position of the nation's banks. "Our best estimate is that more than half of the adjustment has already happened," wrote Citigroup's Dirk Willer and Kenneth Lam on Tuesday. "We therefore don't see the rally of the last days (continuing) much longer." Argentina will file a petition seeking U.S. Supreme Court review of a lower court order requiring it to pay $1.33 billion to "holdout" bondholders, state news agency Telam said late Monday. Kazakhstan is one of several ex-Soviet Union countries that have been under pressure to contain a spillover from a sharp fall in the currency of Russia, their main trading partner. The rouble, which was little changed against the dollar on Tuesday, has weakened 5.3 percent this year because of concerns over the country's slowing economic growth and high inflation. Kazakhstan's tenge traded at 184 per dollar after the central bank said it would devalue the currency by 19 percent because of a decline in other emerging market currencies and to combat large-scale market speculation. The devaluation lifted Kazakh stocks, with the local market rallying 12 percent. "While this looks very much a local story, in an attempt to regain competitiveness against the (rouble) in a local customs union, it does follow a global theme...which is the deflation of over-valued commodity currencies as the Fed lifts its foot off the monetary accelerator," wrote ING analysts led by Chris Turner on Tuesday. In Ukraine, where anti-government protests are weighing on the economy, the government imposed new capital controls to support the hryvnia last week. But in the week before that the central bank had allowed the currency to depreciate. The hryvnia was down 2.3 percent on the day at 8.61 per dollar, having fallen as low as 8.87 last week, levels not seen since September 2009. Banks said capital controls were likely to cripple trade and lead to a currency black market.
For GRAPHIC on emerging market FX performance 2014, see http://link.reuters.com/jus35t For GRAPHIC on MSCI emerging index performance 2014, see http://link.reuters.com/weh36s For GRAPHIC on MSCI emerging Europe performance 2014, see http://link.reuters.com/jun28s For GRAPHIC on MSCI frontier index performance 2014, see http://link.reuters.com/zyh97s For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see )
(Additional reporting by Carolyn Cohn and Anthony Esposito; Editing by John Stonestreet, Dan Grebler and Peter Galloway)