EMERGING MARKETS-Brazil, Mexico currencies drop on economy concerns

Mon May 6, 2013 1:57pm EDT

* Business activity data from China, Europe spur worries
    * Brazil's balance of payment performance in focus
    * Mexican peso, Brazilian real drop about 0.2 pct each

    SAO PAULO, May 6 (Reuters) - The currencies of Brazil and
Mexico edged lower on Monday as weak economic data in China and
Europe set off a new round of caution over the global economic
outlook, tempering the optimism on Friday after the U.S. jobs
numbers.
    Trading volumes were below average as Japanese and UK
financial markets were closed for holidays.
    The Mexican peso dropped 0.25 percent after hitting a
three-week high on Friday as reports showed Chinese business
growth in April hit its slowest pace since August 2011 and that
recession continued to drag on euro zone companies, including in
Germany. 
    The Brazilian real  lost 0.2 percent against
the U.S. dollar. Investors were becoming worried about a
deterioration in Brazil's balance of payments, but were
unwilling to make strong bets against the real on fears of
central bank intervention.
    "Investors are not sure about the real situation of the
Brazilian economy, so they keep trading cautiously," said
Reginaldo Gualhardo, a currency desk manager at Treviso
brokerage in Sao Paulo.
    Economic data last week showed Brazil's trade deficit
deepened to nearly $1 billion in April, the latest sign of
deterioration in the country's balance of payments. In March,
Brazil posted its worst current account deficit on record for
that month.  
    Despite the poor data, the currency has remained steady as
Brazil's central bank has systematically intervened to keep the
real around the 2-per-dollar mark, a level that policymakers
consider adequate to support exporters without adding to
inflation pressure.
    "Big news will be needed for the currency to move away from
current levels," said Jose Carlos Amado, a trader with
Renascenca brokerage in Sao Paulo.
    
    Latin American FX prices at 1730 GMT:
    
 Currencies                           Daily  YTD pct
                                        pct   change
                            Latest   change  
 Brazil real                2.0130    -0.22     1.34
                                             
 Mexico peso               12.1004    -0.25     6.31
                                             
 Chile peso               469.3000     0.09     2.00
                                             
 Colombia peso           1828.6000     0.31    -3.42
                                             
 Peru sol                   2.6160     0.42    -2.48
                                             
 Argentina peso             5.2050    -0.10    -5.62

 Argentina peso             9.8300     0.51   -31.03
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