EMERGING MARKETS-Brazil real, Mexico peso gain with Wall St

Tue Feb 5, 2013 4:47pm EST

* Strong U.S. quarterly earnings drive up risk appetite
    * Colombia peso ends flat after finance minister comments
    * Brazil real gains 0.5 pct, Mexican peso 0.6 pct higher

    By Walter Brandimarte
    RIO DE JANEIRO, Feb 4 (Reuters) - The Brazilian real and the
Mexican peso rose on Tuesday after strong U.S. corporate
earnings encouraged investors to buy higher-risk assets such as
stocks and emerging market currencies.
    The Mexican peso gained 0.5 percent, recovering part
of Monday's selloff, as key U.S. stock indexes rallied around 1
percent.
    The optimism was based on data showing that, with results in
for more than half of the S&P 500 companies, 69 percent of them
had beaten profit expectations. The numbers are particularly
encouraging for Mexico, whose economy deeply relies on the
performance of its northern neighbor.
    In Brazil, the real  ended 0.5 percent stronger
at 1.9845 per dollar. Analysts say the Brazilian currency is
likely to remain around the 2-per-dollar mark at least in the
short term, as the Finance Ministry and the central bank appear
to disagree on the ideal level for the exchange rate.
    While the Finance Ministry appears to favor a weaker real in
order to boost exports, the central bank seems to prefer a
stronger currency to help anchor inflation expectations,
analysts say. 
    "For the Finance Ministry to win the currency war, a real at
2 per dollar won't be enough. But for the central bank to
control inflation expectations, a real at 2 per dollar won't do
either," said Andre Perfeito, chief economist at Gradual
Investimentos in Sao Paulo.
    "That behind-the-curtains dispute between the Finance
Ministry and the central bank remains on investors' radar and
has been bringing a certain stability to the exchange rate," he
added. 
    Other Latin American currencies have been more aggressive in
curbing currency gains to protect their domestic industry.
    The Colombian peso ended little changed after
Finance Minister Mauricio Cardenas said the government would use
every tool in its arsenal to weaken the currency, including
buying dollars on the spot market to prepay external debt.
 
    In Peru, the sol also ended unchanged after the
central bank bought $180 million in its foreign exchange market,
offsetting the increase in global appetite for risk. 

    Latin American FX prices at 2130 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                1.9845     0.50     2.82
                                             
 Mexico peso               12.6350     0.58     1.81
                                             
 Chile peso               472.8000     0.02     1.25
                                             
 Colombia peso           1786.9800     0.05    -1.17
                                             
 Peru sol                   2.5770     0.00    -1.01
                                             
 Argentina peso             4.9825     0.00    -1.40

 Argentina peso             7.5600     2.12   -10.32
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.