Latin American financial markets ended mixed on Friday, with Brazil's stocks and currency gaining after a larger-than-expected interest rate cut, but Venezuela's bonds plunging on negative credit rating news. Brazil's benchmark Bovespa stock index rose 0.28 percent while the national currency, the real, gained 1.25 percent to 1.927 per US dollar in the first session after the central bank cut interest rates by 100 basis points, more than the 75 basis points forecast by most economists.
The decision, aimed at avoiding a recession in Latin America's largest economy this year, "may boost foreign inflows into Brazil's stock market," also strengthening the real, said Francisco Carvalho, a currency trader at Liquidez brokerage in Sao Paulo.
As key Wall Street indices closed mixed, the MSCI stock index for Latin America finished 1.2 percent higher, booking gains of 2 percent for the entire week. The indicator has rallied about 60 percent since the beginning of March.
But S&P said late on Thursday it will not have all the information to decide on a possible downgrade of Mexico's ratings until the last quarter of this year, after Congress approves the budget for 2010. The Colombian peso, on the other hand, firmed 0.16 percent to 2,012.80 per dollar while the Peruvian sol strengthened 0.37 percent to 2.972 per greenback.
PDVSA's ratings were downgraded to B-plus from BB-minus, and S&P maintained a negative outlook on them, saying another downgrade is possible if the company's liquidity position deteriorates further. Venezuela's global bonds due 2027 sank 3.313 points in price to 68.500. Venezuelan bond spreads over US Treasuries, an important measure of risk aversion, widened 35 basis points to 1,067 basis points on the benchmark J.P. Morgan index.