EMERGING MARKETS-Latam FX surrenders gains on Cyprus deal terms

Mon Mar 25, 2013 1:20pm EDT

* Investors fear Cyprus deal a template for crisis
resolution
    * Brazil real remains above 2/dlr, c.bank intervention eyed
    * Mexico peso gains 0.1 pct, Brazil real drops 0.1 pct

    By Natália Cacioli
    MEXICO CITY, March 25 (Reuters) - Latin American currencies
gave up early gains on Monday on fears a Cyprus bailout deal,
which includes heavy losses for big bank depositors, could be
used as a model to resolve similar banking crises in the euro
zone.
    The real  and the Mexican peso rose on
news of the last-minute deal to save Cyprus from a financial
meltdown. The currencies then retreated on broader concerns
about the region's banking sector. 
    Worries were stoked by Dutch finance minister, head of the
Eurogroup, who told Reuters and the Financial Times the rescue
program represents a template for resolving euro zone banking
problems and other countries may have to restructure their
banking sectors.  
    "Markets out there are still very nervous," said a currency
trader in Sao Paulo. "Early in the session, we had some good
gains, but they're all gone now. If things improve abroad, then
maybe the real may gain momentum to strengthen past 2 per
dollar."
    Brazil's real last traded at 2.011 per dollar, 0.1 weaker
than Friday's close. It crossed on Thursday the 2-per-dollar
mark that many analysts believed to be a boundary of an informal
trading range imposed by policymakers.
    Since then, investors have been wary of a possible central
bank intervention to stem currency losses. Many analysts say the
bank is unlikely to allow the real to depreciate too much to
avoid inflation pass-through.
    In Mexico, the peso was 0.1 percent stronger at
12.3475 per dollar. It gained more than half a percentage point
on Friday after higher-than-expected inflation data suggested
the central bank will be unable to further lower interest rates
in coming months.
    
    Latin American FX prices at 1635 GMT:
  
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.0110    -0.07     1.44
                                             
 Mexico peso               12.3475     0.09     4.18
                                             
 Chile peso               472.7000     0.00     1.27
                                             
 Colombia peso             holiday    n/a      n/a
                                             
 Peru sol                   2.5870     0.12    -1.39
                                             
 Argentina peso             5.1150    -0.05    -3.96

 Argentina peso             8.3000     2.17   -18.31
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