EMERGING MARKETS-Brazil rates dip as economists cut GDP view

Mon Jan 14, 2013 12:53pm EST

* Brazil economy seen expanding less this year
    * Latam currencies mostly flat before key Chinese data
    * Brazil real gains 0.2 pct; Mexican peso up 0.1 pct

    By Danielle Fonseca
    SAO PAULO, Jan 14 (Reuters) - Brazil's interest-rate futures
dropped on Monday after analysts cut their estimates for the
country's 2013 economic performance for a second week,
reinforcing expectations that the base Selic rate will remain
stable this year despite rising inflation.
    Economists polled by the central bank in a weekly survey now
see Brazil's economy expanding 3.2 percent this year, less than
the 3.26 percent forecast in the previous survey, even as
inflation estimates keep going up. 
    The data added to expectations that Brazil's central bank
will leave inflation concerns on the back burner as it keeps the
base Selic rate at an all-time low of 7.25 percent during 2013.
    "Markets are still focused on activity numbers," said Paulo
Nepomuceno, chief strategist at Coinvalores brokerage in Sao
Paulo. 
    He added, however, that persistently high inflation numbers
could force rates up in the future. "Soon markets would start
paying more attention to inflation, then maybe we'll have a
different shape to the interest-rate curve."
    Interest-rate contracts maturing in January 2014,
one of the most traded, fell 1 basis point to 7.10 percent,
while those maturing in January 2015 dropped 4 basis
points to 7.69 percent.
    
    CURRENCIES MODESTLY STRONGER
    Latin America's most traded currencies rose modestly as
investors awaited some key economic data from China later this
week, including the country's economic performance during the
fourth quarter.
    The Brazilian real  gained 0.2 percent on hopes
that the data would show China, the largest consumer of Latin
American commodity exports, continued to grow at a healthy pace
at the end of 2012.
    In Mexico, the peso edged up 0.1 percent to 12.6415,
its strongest level in about 10 months.
    On the other hand, the Chilean peso dropped 0.3
percent to 473.50 per dollar, as investors worried the central
bank would soon intervene to curb a recent rally that has added
more than 1 percent to the currency's value since the beginning
of the year. 

    Latin American FX prices at 1735 GMT:
    
 Currencies                       daily %    YTD %
                                   change   change
                          Latest           
 Brazil real              2.0311     0.19     0.44
                                           
 Mexico peso             12.6430     0.12     1.75
                                           
 Argentina peso*          7.2300    -0.41    -6.22
                                           
 Chile peso             473.5000    -0.27     1.10
                                           
 Colombia peso        1,758.3000     0.29     0.44
                                           
 Peru sol                 2.5370     0.24     0.55
                                           
 * Argentine peso's rate between                  
 brokerages
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