EMERGING MARKETS-Latam FX up on stimulus bets, real falls

* Commodities rally on bets ECB will cut rates to record low
* Brazil cenbank always considering dollar buys-director
* Brazil real drops 0.5 pct, Mexican peso up 0.2 pct

By Natalia Cacioli
SAO PAULO, July 3 (Reuters) - Most Latin American currencies
gained on Tuesday on bets European policymakers would deploy new
stimulus measures that could translate into additional
foreign-currency inflows to the region.
Chances the European Central Bank will cut interest rates to
a new record low on Thursday and take extra measures to boost
growth spurred a broad rally in emerging market assets.

The Brazilian real was an exception. It erased
early gains to slide about half a percentage point after a
central bank director said policymakers are constantly
considering the purchase of dollars on the spot market to mop up
excess liquidity. Such moves tend to weaken the real.
The Chilean and Colombian pesos led gains among Latin
American currencies, boosted by a rally in commodities.
Chile's peso jumped 1.2 percent as the price of
copper, the country's main export, hit a seven-week high. The
Colombian peso was 0.9 percent higher.
The Mexican peso rose a more modest 0.2 percent,
however, as trading volumes thinned ahead of the U.S.
Independence Day holiday.
In Brazil, Aldo Mendes, the central bank's director of
monetary policy, told local news agency Agencia Estado that
disappointing industrial production figures in Brazil make it
more likely the government will seek a weaker real to boost
exports.
He added that, in his personal view, a real weaker than 2
per dollar "may not be good for the industrial sector."
The real , which had strengthened to as much as
1.9783 per U.S. dollar earlier in the session, erased all its
gains right after Mendes' comments. It last traded at 1.9958,
just a tad shy of the 2-per-dollar threshold.
"To say that the central bank may intervene buying dollars
and not only selling (currency swaps) caused the market to
immediately turn around," said Italo dos Santos from Icap
brokerage.
The central bank last purchased dollars on the spot market
at the end of April, when the real was trading below 1.90. As
the currency weakened past the level of 2 per dollar in May, the
central bank started selling currency swaps, which essentially
boost the supply of dollars in the futures market.

Latin American FX prices from Reuters at 1707 GMT

Currencies daily % YTD %
change change
Latest
Brazil real 1.9960 -0.48 -6.39

Mexico peso 13.3025 0.21 5.01

Argentina peso* 5.9500 0.17 -20.50

Chile peso 494.7500 1.24 4.96

Colombia peso 1,768.1500 0.88 9.63

Peru sol 2.6430 0.34 2.04

* Argentine peso's rate between
brokerages