ECB@ (Recasts lede with Brazilian real's drop, adds analyst's comment) BRASILIA, June 14 (Reuters) - The Brazilian real fell to its weakest since May 2017 on Thursday after the European Central Bank announced it will end its bond purchasing scheme by year-end, removing a key source of liquidity from global markets. The announcement, which makes the ECB the latest central bank in developed economies to take steps to move away from stimulus measures introduced to recover from the global financial crisis, weighed on demand for emerging market assets.
The real fell 2.64 percent to 3.8119 versus the U.S. dollar, its weakest since May 18 of last year. "The euro plummeted and strengthened the dollar worldwide. Outside the emerging currencies have gotten worse; we had to keep up," a currency trader at a local brokerage said. Earlier in the session the real had firmed, supported by the central bank's reinforced intervention. The bank has increased sales of traditional currency swaps, which function like future dollar sales, after concerns over a widening fiscal deficit and accelerating inflation in the United States as well as Brazilian presidential elections later this year drove a currency selloff. Brazil's central bank said on Thursday it will continue to offer currency swaps to the market and sees no restriction for the amount of those swaps to "considerably exceed" volumes seen in the past. Mexico's peso was also hit after the ECB's announcement, slipping to its weakest level since January 2017. It fell 1.18 percent to 20.8835 per dollar.
Key Latin American stock indexes and currencies at 23:25 GMT:
Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1125.71 -0.88 -2.83 MSCI LatAm 2479.32 -0.53 -12.33 Brazil Bovespa 71421.19 -0.97 -6.52 Mexico IPC 47197.24 0.93 -4.37 Chile IPSA 5524.69 -0.17 -0.72 Chile IGPA 27920.80 -0.08 -0.21 Argentina MerVal 30114.88 -0.38 0.16 Colombia IGBC 12281.85 -0.16 8.01 Venezuela IBC 49413.62 11.65 3811.97
(Reporting by Bruno Federowski and Claudia Violente Writing by Anthony Esposito Editing by G Crosse and Cynthia Osterman)