EMERGING MARKETS-Brazil, Mexico currencies remain stable ahead of Fed meeting

Mon Jun 17, 2013 11:19am EDT

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* Brazil's real, Mexico's peso steady ahead of Fed meeting
    * Fed decision may determine direction of flows into region

    SAO PAULO, June 17 (Reuters) - Latin American currencies
seesawed on Monday ahead of the U.S. Federal Reserve policy
meeting this week, as investors awaited signs of how long the
U.S. Federal Reserve will decide to continue massive monetary
stimulus in the world's biggest economy.
    The Brazilian real and the Mexican peso have weakened in
recent weeks on worries the Fed may soon begin to slow a
bond-buying program that pushed U.S. interest rates down toward
zero, encouraging a steady inflow of dollars into emerging
markets.
    Fed policymakers meet Tuesday and Wednesday and investors
expect signals on whether, and when, the Fed will start scaling
back its monthly $85 billion bond purchase program.
    "If they move ahead, we should see downward pressure" on
regional currencies, "especially in the real," said Sidnei
Moura, an executive director at São Paulo-based NGO Corretora.
"If things stay as they are, we may see some inflows. Market
direction entirely depends on the Fed's meeting this week."    
    * The Brazilian real  was largely stable on
Monday as expectations that the $4.8 billion initial public
offering of Votorantim Cimentos SA will help attract a sizable
inflow of foreign money. In recent days, foreign funds have
exited positions in the equity and bond markets following the
government's decision to eliminate a transactions tax on
derivatives.
     * The Mexican peso lost 0.1 percent, in a sign that
traders are still attentive to the Fed's Wednesday decision. The
currency is currently trading at levels around the 200-day
moving average.
    * The Chilean peso gained less than 0.1 percent on
speculation among investors that low inflation is increasingly
leaving the central bank with room to cut interest rates.
    * The Colombian peso weakened 0.1 percent on Monday.
Growth likely lost momentum in the first quarter, but low
interest rates may limit the ability of policymakers to revive
growth in the country, traders said.
    
    Latin American FX prices at 14:54 GMT:
    
 Currencies                                       daily %       YTD %
                                                   change      change
                                       Latest              
 Brazil real                           2.1524       -0.27       -5.22
                                                           
 Mexico peso                          12.7125       -0.02        1.19
 Chile peso                          492.1000        0.06       -2.72
 Colombia peso                      1883.2000       -0.07       -6.22
 Peru sol                              2.7250       -0.07       -6.39
                                                           
 Argentina peso (interbank)            5.3350       -0.05       -7.92
                                                           
 Argentina peso (parallel)             8.5200        0.35      -20.42
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