EMERGING MARKETS-Mexican peso at 4-month high on Fed stimulus hopes

* Weaker-than-expected U.S. jobs data raises QE3 hopes
* Mexico central bank leaves rates unchanged
* Mexican peso gains 0.7 pct, Chilean peso up 0.04 pct

By Gabriel Stargardter
MEXICO CITY Sept 7 (Reuters) - The Mexican peso hit a
four-month closing high on Friday as below-forecast jobs data
from the United States drove investors toward emerging markets
and further raised the prospect of the Federal Reserve pumping
additional money into the sluggish American economy.
A public holiday in Brazil shuttered the week's trading in
the real a day early.
The Mexican peso rose 0.72 percent to 12.9760 per
U.S. dollar after trading as low as 12.9413. It was the first
time it has closed below 13 pesos per dollar since May 2,
according to Reuters data.
U.S government data on Friday showed non-farm payrolls rose
by a weaker-than-expected 96,000 jobs in August, setting the
stage for a third round of quantitative easing, or QE, when Fed
policy-makers meet next week.
In the Fed's two previous rounds of easing, it pumped about
$2.3 trillion into the economy to buy bonds with the aim of
lowering long-term interest rates. That encouraged more
investors to look for higher interest rate returns elsewhere,
including in emerging markets such as Mexico.
"The market now expects that the chances of the Fed coming
out and throwing money at the economy, of printing more money,
has improved, so the price of the dollar has fallen leading
other currencies to appreciate," said Ezequiel Aguirre, a Latin
American strategist at Bank of America-Merrill Lynch in New
York.
With the annual rate of inflation in Mexico reaching a more
than two-year peak of 4.57 percent in August on the back of
rising food prices, the central bank on Friday left interest
rates unchanged at 4.5 percent. In contrast, regional peers
Colombia and Brazil have slashed rates to record lows to
stimulate growth.
The Mexican central bank aims for annual inflation of 3
percent, plus or minus 1 percentage point.
"With inflation well above target and core steadily going
up, I think there'll be resistance from some members of the
board to consider a cut at this point," said Rafael de la
Fuente, an economist at UBS.
"And a hike (in interest rates) I don't think is warranted
given that most of the price pressures are supply shock driven."
The Chilean peso jumped 0.04 percent to 475.70 per
dollar, despite news that Chile's yawning trade deficit
has grown to its largest levels - $843 million -
since October 2008.

Latin American FX prices at 2220 GMT:

Currencies daily % YTD %
change change
Latest
Brazil real Holiday

Mexico peso 12.9760 0.72 7.66

Argentina peso* 6.3100 0.48 -25.04

Chile peso 475.7000 0.04 9.17

Colombia peso 1,800.8000 -0.03 7.64

Peru sol 2.6080 0.00 3.41

* Argentine peso's rate between
brokerages