EMERGING MARKETS-Latam currencies firm on US factory data

Mon Oct 1, 2012 6:28pm EDT

* US manufacturing sector expands for 1st time since May
    * Central bank intervention fears curb FX gains in Brazil
    * Mexican peso up 0.2 pct, Brazilian real nearly flat


    By Jean Arce
    MEXICO CITY, Oct 1 (Reuters) - Latin American currencies
gained on Monday after a surprise  expansion in the U.S.
manufacturing sector eased concerns about a global slowdown.
    The Mexican peso firmed 0.2 percent to 12.84 per U.S.
dollar after data showed the manufacturing sector of the United
States, Mexico's main trading partner, expanded in September for
the first time since May. 
    "This scenario is positive for manufacturing activity, which
obviously has an impact in the local market," said Mario Copca,
an analyst at brokerage CI in Mexico City.
    Mexican factories tend to closely track activity in the
United States. An index of manufacturing activity in Mexico
slowed for a third month in a row in September, but still
pointed to further expansion ahead. 
    Investors have been revising their estimates for stronger
Latin American currencies as more dollars are expected to flow
into emerging markets as a result of government and central bank
efforts to stimulate growth.
    Analysts now expect the peso to finish 2012 at 12.88 per
dollar, stronger than the level of 13.01 forecast a month ago, a
survey by the Mexican central bank with private analysts showed.
    Federal Reserve Chairman Ben Bernanke on Monday defended the
U.S. central bank's controversial bond-buying stimulus plan.
 
    Brazilian policymakers have complained that easy monetary
policies in the United States are pushing speculators to buy up
emerging market assets, strengthening local currencies and
undermining the competitiveness of domestic manufacturers.
    The Brazilian real  bid a slight 0.05 percent
firmer at 2.0254 per dollar on the local market close. Investors
have been avoiding making strong bets on a stronger real
currency for fear of central bank intervention.
    Brazilian policymakers have managed to keep the real weaker
than 2 per dollar -- a level they consider beneficial to
exporters -- since early July.
    "Here the concern is that the central bank will step into
the market if the dollar weakens too much. For now, nobody is
willing to fight the central bank," said Mario Battistel, head
of the currency desk at Fair Corretora, a brokerage in Sao
Paulo. 
    In Chile, the peso gained 0.4 percent, recovering
part of the losses seen on Friday, when threats of government
intervention caused the currency to slump the most in seven
weeks. 
    Fears of intervention in Chile have grown after central bank
chief Rodrigo Vergara said policymakers may intervene during
"exceptional periods" in which the exchange rate is
significantly out of line with fundamentals.
    The move by Chile pushed it closer to the stance of
policymakers in Brazil, Colombia and Peru who have been
intervening in markets to fight dollar inflows.
    
    Latin American FX prices at 2200 GMT:
    
 Currencies                            daily %  year-to-
                                        change     ate %
                              Latest              change
 Brazil real                  2.0260      0.02     -7.77
                                                
 Mexico peso                 12.8400      0.20      8.80
                                                
 Argentina peso*              6.2400      0.96    -24.20
                                                
 Chile peso                 472.6000      0.42      9.88
                                                
 Colombia peso            1,800.1900      0.01      7.68
                                                
 Peru sol                     2.5980     -0.08      3.81
                                                
 * Argentine peso's rate between                        
 brokerages
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