EMERGING MARKETS-Latam FX falls, eying Cyprus; Brazil real boosted by exporters

* Cyprus rejects bailout plan, nears financial meltdown
* Brazil exporters sell dollars to take advantage of weaker
real
* Brazil real 0.1 percent stronger, Mexico peso drops 0.3
percent

By Walter Brandimarte
RIO DE JANEIRO, March 19 (Reuters) - Latin American
currencies weakened on Tuesday as investors feared a potential
escalation of the euro zone crisis after Cyprus rejected terms
of a bailout offered by the European Union.
Investors sought dollars and other safer assets as the
Cypriot parliament overwhelmingly rejected the bailout plan even
after the government proposed to spare small savers from a
divisive levy on bank deposits.
The Mexican peso, the most liquid Latin American
currency, dropped 0.3 percent but still remained the best
performing currency in the region with year-to-date gains of
more than 3 percent.
The Chilean peso lost 0.2 percent to close at a
two-week low of 472.70 per U.S. dollar.
"The peso was dragged lower by the poor performance of
global markets, with nearly all stock indexes falling, as well
as copper prices," said a trader in Santiago, referring to
Chile's main export product.
In Brazil, however, the real gained 0.1 percent
as exporters stepped into the market to take advantage of a
weaker currency, which had dropped about 2 percent over six
consecutive sessions of losses.
"Exporters and those who have (dollar) loans are taking the
opportunity to close operations in advance," said Mario
Battistel, a currency manager at Fair brokerage in Sao Paulo.
In Argentina's black market currency trade, the peso
sank 2.3 percent to a record-low ask price of 8.27 per dollar.
The local currency lost ground a day after the government
further tightened controls on foreign currency purchases, a move
that will force more Argentines to buy greenbacks at a premium
in the black market.
It is now virtually impossible to buy foreign currency at
the official exchange rate, which is controlled by
the central bank. In the formal market, the peso fell 0.98
percent to end at 5.0975 per dollar. Tuesday's losses on the
black market mean the spread between the two rates widened to 62
percent.

Latin American FX prices at 1915 GMT:

Currencies Daily YTD pct
pct change
Latest change
Brazil real 1.9859 0.09 2.72

Mexico peso 12.4420 -0.26 3.39

Chile peso 472.7000 -0.21 1.27

Colombia peso 1811.2500 -0.15 -2.50

Peru sol 2.5930 0.15 -1.62

Argentina peso 5.0950 0.05 -3.58

Argentina peso 8.2500 -2.06 -17.82