EMERGING MARKETS-Brazil real up on cenbank measure, Mexican peso firms

Tue Dec 4, 2012 9:33pm EST

* Brazil central bank eases export financing rules
    * Mexican consumer confidence up in Nov for second month
    * Brazil real up 0.17 pct, Mexico peso gains 0.36 pct


    By Natalia Cacioli and Jean Arce
    SAO PAULO, Dec 4 (Reuters) - Brazil's real edged up after
the central bank acted to ease financing for exporters, a move
that will likely boost dollar inflows to the country.
    The Mexican peso gained after data out on Tuesday showed
consumer confidence in Mexico rose for the second month in a row
in November, bolstering bets that the global slowdown is not
weighing too heavily on Latin America's No. 2 economy.
    The Brazilian real  erased early losses and
gained 0.17 percent to close at 2.1155 after the central bank
narrowed the scope of a hefty tax levied on exporters that
receive advance payment for the goods they sell abroad, likely
boosting liquidity in the foreign exchange market. 
    Under the new rules Brazil will eliminate a 6 percent
financial transaction tax (IOF) on prepayments of up to five
years on exports. 
    The decision came one day after the central bank heavily
intervened in the market - auctioning currency swaps and dollars
on the spot market - to halt a sharp depreciation of the real.
 
    "The market was going too fast in the direction of a weaker
currency. Today's measure comes on the heels of yesterday's
strong intervention, so it is meaningful," said Alfredo
Barbutti, chief economist at BGC Liquidez, a brokerage in Sao
Paulo.
    The series of interventions are likely an attempt by the
central bank to smooth out a recent slump in the real, which
lost 4.7 percent in November, still allowing the currency to
gradually weaken. 
    Members of the Brazilian government have said they want a
weaker currency to help manufacturers lift exports and better
compete against imports, but it is not clear how much the
central bank will allow the real to slide, given inflation
concerns.
    The Mexican peso rose 0.36 percent to close at 12.9500 per
dollar, after data showed an index of consumer confidence rose
to 97.0 in November from 96.8 in October.
    The peso has gained more than 7 percent against the dollar
so far this year, one of the biggest advances against the
greenback among 152 currencies tracked by Reuters.
    But analysts said a $600 billion cocktail of tax increases
and spending cuts looming over the United States - Mexico's
largest trading partner - must be resolved before the peso can
strengthen significantly.  
    "Definitely, for us to see a stronger trend of appreciation
in the exchange rate, we need to hear more news or get more
clarity on fiscal issues from the United States," said Rafael
Camarena, an economist with financial group Santander.
    Optimism for progress in resolving the U.S. "fiscal cliff"
was dented on Tuesday after remarks by President Barack Obama,
who rejected a Republican proposal to resolve the crisis as "out
of balance" and said any deal must include a rise in income tax
rates on the wealthiest Americans. 

    Latin American FX prices at 02:04 GMT
 Currencies                            daily %  year-to-
                                        change     ate %
                              Latest              change
 Brazil real                  2.1155      0.17    -11.68
                                                
 Mexico peso                 12.9500      0.36      7.87
                                                
 Argentina peso*              6.4200      0.31    -26.32
                                                
 Chile peso                 480.7000      0.15      8.03
                                                
 Colombia peso            1,812.8100      0.14      6.93
                                                
 Peru sol                     2.5800      0.00      4.53
                                                
 * Argentine peso's rate between                        
 brokerages
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