EMERGING MARKETS-Mexico, Chile pesos sink after US data

Fri Jul 5, 2013 7:05pm EDT

MEXICO CITY, July 5 (Reuters) - Latin American currencies
suffered sharp losses on Friday after stronger-than-expected
U.S. jobs data increased bets the Federal Reserve could begin
cutting its stimulus measures this year and draw investors out
of emerging markets.
    U.S. data showed employers added 195,000 new jobs in June,
fueling expectations the Fed could soon cut back its bond-buying
program, which for years has provided a steady source of dollars
for investors seeking higher returns in emerging markets.
 
    Brazil's real pared steep early losses after the central
bank intervened in the market to support the currency and the
government said it may lower some import duties to help offset
the impact of a sharp depreciation of the currency on inflation.
 

    * Brazil's real  slipped 0.12 percent, its
losses cushioned by a central bank sale of traditional currency
swaps, derivative contracts that emulate an injection of dollars
in the futures market. 
    * Brazil's real was hammered to a more than 4-year low
earlier this week, and the central bank is seen raising its key
interest rate for a third straight time next week to keep
inflation in check following the currency's tumble, a Reuters
poll showed. 
    * Mexico's peso  fell the most in more than
two weeks, sliding 1.27 percent and crossing the psychologically
relevant level of 13 per dollar.
    * Mexico had been a top destination for global investors
seeking higher yields during the recent years of ultra-low U.S
interest rates, and analysts say local assets could see even
sharper losses as those investors withdraw from riskier assets.
    * Sharp losses in the Mexican currency have pushed markets
to rule out further interest rate cuts this year. Mexico's
central bank is seen holding its main rate steady next week.
 
    * Chile's peso dropped 1.1 percent as the price of
copper, the country's main export product, fell sharply. 

    Latin American FX prices at 2200 GMT:
 Currencies                          daily %    YTD %
                                      change   change
                             Latest           
 Brazil real                 2.2587    -0.12    -9.68
                                              
 Mexico peso                13.0750    -1.27    -1.61
                                              
 Chile peso                507.9000    -1.10    -5.75
                                              
 Colombia peso            1928.6500    -0.71    -8.43
                                              
 Peru sol                    2.7900    -0.29    -8.57
                                              
 Argentina peso              5.4025     0.05    -9.07

 Argentina peso              7.9200     0.76   -14.39
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