EMERGING MARKETS-Latam currencies firm on global stimulus hopes

Tue Apr 30, 2013 3:28pm EDT

* Fed expected to keep stimulus on Wednesday
    * ECB seen cutting benchmark interest rate on Thursday
    * Mexico peso firms 0.7 pct, Brazil real edges 0.2 pct
higher

    MEXICO CITY/RIO DE JANEIRO, April 30 (Reuters) - Latin
American currencies gained on Tuesday as investors bet central
banks in the United States and Europe will maintain or even
expand global liquidity, encouraging investors to keep looking
for higher yields in emerging markets.
    Mexican assets seemed to benefit the most from prospects for
additional easy-money policies, even after central bank chief
Agustin Carstens on Monday said Mexico could consider cutting
interest rates again in the second half of the year.
 
    The Mexican peso climbed 0.7 percent on Tuesday, one
day after Carstens' comments caused it to weaken around 0.6
percent.
    While Carstens' dovish remarks underscored policymakers'
concerns about the strength of the peso, some analysts still
believe the central bank will not be able to lower interest
rates this year, keeping the allure of Mexican assets intact.
    Others say that, even if Mexico's interest rates fall below
their current all-time low of 4 percent, peso-denominated assets
will remain attractive in a world of near-zero interest rates,
especially if the Mexican economy gains speed.
    "The market is really enthusiastic about the possibility of
an additional cut this year," said Rafael Camarena, an economist
at Santander in Mexico City. "But I think it is too early to
count on it," he added.
    The Brazilian real  gained a more modest 0.2
percent, with investors cautious before the Labor Day holiday
that will keep Latin American markets shut on Wednesday.
    The holiday will leave local investors out of the market
when the U.S. Federal Reserve concludes a two-day policy meeting
at which it is expected to maintain its $85-billion-per-month
bond-buying program. 
    On Thursday, the spotlight will be on the European Central
bank. The ECB is expected to cut its benchmark interest rate by
25 basis points at the end of its monetary policy meeting,
adding even more liquidity into global markets.

    Latin American FX prices at 1910 GMT:
    
 Currencies                           Daily  YTD pct
                                        pct   change
                            Latest   change  
 Brazil real                2.0009     0.17     1.95
                                             
 Mexico peso               12.1359     0.70     6.00
                                             
 Chile peso               470.9000     0.13     1.66
                                             
 Colombia peso           1825.4900     0.09    -3.26
                                             
 Peru sol                   2.6420    -0.08    -3.44
                                             
 Argentina peso             5.1875    -0.10    -5.30

 Argentina peso             9.3700    -0.75   -27.64
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