EMERGING MARKETS-Brazil yields dip on lower growth estimates
* Brazil economy seen expanding at slower rate this year * Expectations of continued U.S. Fed stimulus support FX * Brazil real gains 0.17 pct; Mexican peso up 0.31 pct By Danielle Fonseca and Jean Arce SAO PAULO/MEXICO CITY, Jan 14 (Reuters) - Yields on Brazil's interest-rate futures dipped on Monday after analysts cut their 2013 economic growth estimates for a second week, backing bets for stable interest rates 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, below 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 and keep 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. But 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," he Yields on interest-rate contracts maturing in January 2014 , one of the most traded, dipped 1 basis point to 7.10 percent. CURRENCIES MODESTLY STRONGER Latin America's most traded currencies firmed on Monday, after comment by Federal Reserve Chairman Ben Bernanke suggested the U.S. central bank will not soon back away from its ultra-loose monetary policy to support a still-fragile U.S. economic recovery. The Fed's near-zero interest rate and asset purchase programs have driven down yields on U.S. debt and driven investors into the higher-interest rate debt of emerging markets. Bernanke said the Fed still had more "ammunition," and he highlighted the risks to the U.S. economy, including current debt ceiling and budget talks. "Investors like to see stimulus maintained," said Jorge Gordillo, an analyst at CI Banco. In Mexico, the peso firmed 0.31 percent to 12.62 per dollar to close at its strongest level in 10 months. The currency posted even stronger intra-day levels on Friday, but the peso has not been able to hold onto gains past 12.60 per dollar in the last two sessions. Analysts warn that further gains by the peso could be limited as investors eye a debate in the U.S. Congress about lifting the country's borrowing limit to avoid a potentially disastrous debt default. The peso has gained more than 3 percent since late December. "We could still see a bit more of the rally, but it is nearly at its end," Gordillo said. The Brazilian real gained 0.17 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. On the other hand, the Chilean peso dropped 0.27 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 2230 GMT: Currencies daily % year-to change -date % Latest change Brazil real 2.0315 0.17 0.42 Mexico peso 12.62 0.31 1.89 Argentina peso* 7.2300 -0.41 -6.22 Chile peso 473.5000 -0.27 0.95 Colombia peso 1,759.4500 0.22 0.42 Peru sol 2.5370 0.24 0.39 * Argentine peso's rate between brokerages
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