EMERGING MARKETS-Brazil real weakens on month-end speculation
* Optimism on U.S. budget deal aids most Latam currencies * Dollar-long players seek weaker month-end Brazil real rate * Real weakens 0.5 pct, Mexican peso gains 0.1 pct By Natalia Cacioli SAO PAULO, Nov 29 (Reuters) - The Brazilian real extended its losses for a second day on Thursday, under pressure by dollar-heavy investors who wanted to further weaken the currency until the central bank on Friday sets its Ptax monthly exchange reference rate. Elsewhere in Latin America, currencies gained along with emerging market stocks. Boosting investors' appetite for risk was optimism that U.S. leaders could reach a deal to avert steep spending cuts and tax hikes that could plunge the world's largest economy in recession next year. "In the United States, they say there are growing chances of an agreement to avoid the fiscal cliff and that is bring optimism to the market," said Gloria Soto, a currency trader at FXCM Chile. The Mexican peso and the Chilean peso gained 0.1 percent and 0.3 percent, respectively. In Brazil, however, the real lost as much as 1 percent. "The only thing that justifies this currency move is the fight over the Ptax," said Mario Battistel, manager of the currency trading desk at Fair brokerage in Sao Paulo. "I don't see another reason, especially because other (emerging market) currencies are gaining overseas." The Ptax is a benchmark exchange rate for a broad range of contracts, including foreign loans, trade, and derivatives. Dollar-laden speculators may be trying to keep the real weak through the Ptax fix. "The market is long dollars, it looks like some players are trying to push the Ptax higher," said a trader with a large domestic bank in Brazil. A higher Ptax means it costs more reais to buy dollars. The real later trimmed some of its losses, trading 0.5 percent weaker at 2.10 per dollar, as investors feared the central bank could intervene again if the currency continued to slide. Last Friday, as the real traded around 2.11 per dollar, the central band called an auction of traditional currency swaps, derivative contracts that emulate the sale of dollars in the futures market. The bank sold about half of the 62,800 swaps offered at the auction, partly cancelling some reverse swaps that are due to expire on Dec. 3. Traders now expect the central bank to allow the remaining reverse swaps to expire in the next few days, which would curb further currency losses. Latin American currencies at 1715 GMT: Currencies daily % YTD % change change Latest Brazil real 2.1020 -0.60 -11.11 Mexico peso 12.9603 0.07 7.75 Argentina peso* 6.4100 0.94 -26.21 Chile peso 479.0000 0.33 8.41 Colombia peso 1,817.5000 0.32 6.65 Peru sol 2.5810 0.15 4.49 * Argentine peso's rate between brokerages
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