EMERGING MARKETS-Latam FX drops on growth concerns; Mexico peso up

Thu May 2, 2013 2:29pm EDT

* Currencies react to poor US, Chinese data released during
holiday
    * Mexican peso gains as Carstens says c.bank has no easing
bias
    * ECB cuts benchmark interest rate, hints at further easing

    By Walter Brandimarte
    RIO DE JANEIRO, May 2 (Reuters) - Most Latin American
currencies weakened on Thursday as prospects for the region's
exports were hurt by poor U.S. and Chinese economic data
released on Wednesday, when regional markets were closed for the
Labor Day holiday.
    A noteworthy exception was the Mexican peso, the most
liquid Latin American currency, which had already weakened on
Wednesday in overseas trading despite the local holiday. 
    It gained 0.3 percent on Thursday after the European Central
Bank cut interest rates and left the door open to additional
monetary stimulus that could drive investors to higher-yielding
emerging-market assets.
    Also boosting the Mexican peso were comments by central bank
chief Agustin Carstens, who said markets had read too much into
some of his recent remarks about the possibility of another
interest rate cut this year. 
    "Carstens seems to be correcting comments that appeared to
contradict what had been suggested by recent central bank
statements," said Pedro Tuesta, an economist with 4Cast
consultancy in Washington. "The series of comments left markets
confused."
    Carstens' comments had weighed on the peso earlier this week
as lower interest rates could reduce the currency's appeal.
    Other Latin American currency markets focused on the recent
economic data pointing to a slower global economic recovery,
however. Among those, two separate reports on Wednesday showed
China's factory sector unexpectedly slowed last month while the
U.S. manufacturing sector expanded only modestly in April.
 
    The Brazilian real  dropped 0.6 percent while
the Chilean peso fell 0.2 percent.
    Some analysts said comments by ECB chief Mario Draghi, who
said the bank was "technically ready" to cut its deposit rate
into negative territory, added to investors' concerns about the
state of the global economy rather than encouraging risk taking.
    "The market is taking Draghi's remarks as an alert. So the
first reaction is to sell (risk assets), rush to the dollar, and
think later about the real implications of those (possible)
measures," said Luciano Rostagno, chief strategist with WestLB
bank in Brazil.

    Latin American FX prices at 1810 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.0123    -0.61     1.38
                                             
 Mexico peso               12.1745     0.27     5.67
                                             
 Chile peso               471.7000    -0.17     1.48
                                             
 Colombia peso           1838.5000    -0.71    -3.94
                                             
 Peru sol                   2.6450    -0.08    -3.55
                                             
 Argentina peso             5.1900     0.00    -5.35

 Argentina peso             9.5900    -1.98   -29.30
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