Most Latin American currencies strengthened on Thursday on a report that US President Donald Trump was leaning toward Federal Reserve Governor Jerome Powell as his pick to head the US central bank. The report, published by Bloomberg News, fostered expectations that US interest rates might take longer to rise in coming months than previously anticipated, supporting demand for high-yielding emerging market assets.
Powell is seen as more dovish than alternative candidates John Taylor, a Stanford University economist, and former Fed Governor Kevin Warsh. The Mexican peso firmed 0.4 percent, while the Colombian peso strengthened 0.3 percent. Both currencies also tracked an increase in prices of oil, a key export. The Brazilian real rose 0.6 percent as investors turned to bargain-hunting the day after it hit a more than four-month low.
Still, investors remained concerned about whether President Michel Temer can pass important legislation, such as streamlining the nation's costly social security system. A batch of strong corporate earnings helped to lift the benchmark Bovespa stock index, with gains in shares of drugstore chain Raia Drogasil SA, wood pulpmaker Suzano Papel e Celulose SA and GPA SA.
Shares of state-controlled oil company Petraleo Brasileiro SA added the most points to the benchmark index, boosted by rising crude prices. Petrobras, as the company is known, was part of three consortiums winning blocks in Brazil's coveted pre-salt oil region in an auction on Friday.