EMERGING MARKETS-Brazil's real edges up, Mexico's peso flat

Mon Feb 18, 2013 5:34pm EST

* Traders evaluating Mantega comments, Fri central bank
action
    * U.S. holiday keeps trading volumes thin
    * Mexican peso flat after positive Q4 GDP data


    By Asher Levine and Lorena Segura
    SAO PAULO/MEXICO CITY, Feb 18 (Reuters) - The Brazilian real
eked out a gain on Monday as investors weighed signals about the
government's preferred exchange rate, while a holiday in the
United States kept trading volumes low and exchange rates across
the region were little changed.
    Investors in Brazil took a break to re-evaluate their
trading strategies after the local currency, the real,
swung widely in the previous session. 
    On Friday, hawkish comments by Finance Minister Guido
Mantega led traders to step up bets on tighter monetary policy
this year. The real trimmed gains, however, after the central
bank intervened to stop the currency from strengthening past
1.95 per dollar. 
    The real gained 0.12 percent on Monday, to close at 1.9622
against the dollar.
    "With little volatility, the market should slowly begin to
head for 1.95," said Italo dos Santos, a currency specialist at
ICAP Corretora in Sao Paulo. "But the central bank's rationale
changes, the numbers change and we can't assume this level is
here to stay."
    Brazil's central bank targets an inflation rate of 4.5
percent, with a 2 percent tolerance band in either direction.
Trailing 12-month inflation reached 6.15 percent in January.
 
    "The market is still trying to figure out what exchange rate
the government wants," said Jose Carlos Amado, a trader with
brokerage Renascenca in Sao Paulo. "After what Mantega said last
week, the market will continue testing a weaker dollar."
   The Mexican peso weakened 0.02 percent to trade at
12.6871 per U.S. dollar, little changed after data showed
healthy consumer spending helped the country's economic output
pick up to 0.8 last quarter, despite a drop in manufacturing.
 
   "We're expecting low trading activity because of the
holiday," said a Mexico-city based analyst. "Plus, the G-20 is
not sending signals of confidence to markets, since their
recommendations are all about avoiding competitive
devaluations," he added.
    Policymakers from the world's 20 biggest economies promised
on Saturday not to devalue their currencies to boost exports but
stopped short of condemning Japan's easing policies, which have
driven down the yen. 
    
 Latin American FX prices at 2151 GMT:
    
 Currencies                      daily   YTD %
                                     %  change
                                change  
                        Latest          
 Brazil real            1.9622    0.12    3.97
                                        
 Mexico peso           12.6871   -0.02    1.40
                                        
 Chile peso            471.700   -0.15    1.48
                             0          
 Peru sol               2.5780   -0.16   -1.05
                                        
 Argentina peso         5.0100    0.05   -1.95

 Argentina peso         7.6800    0.39  -11.72
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