EMERGING MARKETS-Brazil real rises on central bank's moves
* Brazil central bank calls swap, dollar auctions to support real * Risk appetite sours on contraction in U.S. manufacturing * Brazil real up 0.51 pct, Mexico peso edges down 0.25 pct By Walter Brandimarte and Jean Arce RIO DE JANEIRO/MEXICO CITY Dec 3 (Reuters) - The Brazilian real gained on Monday after the country's central bank threw its weight into the market to drag the currency off a 3-1/2-year low while other Latin American currencies slipped on weak U.S. factory data. The central bank carried out a series of interventions, which included two currency swap auctions in the morning and two dollar auctions on the spot market in the afternoon. Despite the magnitude of the actions, investors believe the central bank is not defending a specific level. Rather, policymakers are likely trying to smooth out the slump in the real, which lost 4.7 percent in November, half of that at the end of the month. Other members of the government have said they want a weaker currency to help manufacturers lift exports and better compete against imports. Brazil has been deploying an array of policies such as tax and energy price cuts in a bid to spur growth. "We still don't know how much weaker the government wants the currency to be," said Joao Medeiros, a currency director at Pioneer brokerage. The real bid 0.5 percent stronger at 2.1190 per U.S. dollar. The currency had dropped to 2.1382 per dollar, its weakest level since early May 2009. Wagers against the real greatly increased on Friday after data showed the Latin America's biggest economy grew in the third quarter at half the rate expected by economists. Concerns that an incipient economic recovery may be again flagging in Brazil is stoking bets that the central bank will hold interest rates at a record low for longer than expected, undercutting the appeal of local assets to investors. Others are being put off by the government's meddling in the economy as it seeks to revive growth. Major banks are telling investors to cut exposure to the currency. "A deterioration in the investment perspective - confidence has been hit hard by government activism and mediocre growth - explains a significant part of the revision," JP Morgan analysts wrote in a report released after the close of the Brazilian foreign-exchange market on Friday. Other Latin American currencies weakened on U.S. manufacturing data, which unexpectedly contracted in November, falling to its lowest level in over three years. The Mexican peso lost 0.25 percent on Monday to 12.9966 per dollar as it pulled back from a six-week high. But analysts and investors remained confident about the Mexican peso's longer-term prospects. Mario Copca, an analyst at CI Casa de Bolsa in Mexico City, said he expected the peso to appreciate in the next few days to 12.68-12.60 per dollar. He doubted the peso would weaken back past the psychological 13.00 per dollar level. Data on Friday showed bets by speculators in favor of a stronger peso on the Chicago exchange rose for the first time in seven weeks last week, jumping about $271 million to $3.6 billion by Nov. 27. Mexico's peso was one of the top emerging market bets early this year, pushing the position in Chicago to a record high of $5.5 billion in late September before a sharp slump in the peso pushed investors to stop-loss levels. Latin American FX prices at 22:41 GMT Currencies daily % year-to- change ate % Latest change Brazil real 2.1190 0.51 -11.82 Mexico peso 12.9966 -0.25 7.49 Argentina peso* 6.4200 0.31 -26.32 Chile peso 481.4000 -0.12 7.87 Colombia peso 1,815.3000 -0.02 6.78 Peru sol 2.5800 -0.08 4.53 * Argentine peso's rate between brokerages
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