EMERGING MARKETS-Latam FX drops on Fed fears, cenbank buoys Brazil's real
RIO DE JANEIRO, July 18 (Reuters) - Most Latin American currencies weakened on Thursday after better-than-expected U.S. labor and factory data made it easier for the Federal Reserve to cut back on the stimulus measures that for years have been supporting global appetite for risk. The Brazilian real edged higher, however, after the central bank stepped into the market, showing it will not allow the currency to weaken much further without a fight. Gains in the Brazilian real caused yields paid on long-dated interest-rate futures to trim early gains. Those yields had jumped early in the day after the central bank upped its inflation forecasts for next year, expressing concern about the inflationary impact of a recent currency weakening. * Brazil's real gained 0.1 percent to 2.2241 per dollar after the central bank sold all the 20,000 traditional currency swaps, derivative contracts that mimic the sale of dollars in the futures market. The auction was designed to roll over similar contracts that expire on Aug 1. * Brazil's central bank also called for Friday morning a similar auction to roll over expiring swaps, showing it is closely monitoring the foreign exchange market. * Yields paid on Brazil's interest-rate futures trimmed early gains as the real stabilized. Those yields had initially risen after minutes of the central bank's latest monetary policy meeting showed policymakers still see inflation accelerating above the center of a government target next year, despite recent Selic hikes. * Mexico's peso weakened 0.3 percent to 12.5215 per dollar after better-than-expected U.S. economic data fueled fears of an upcoming withdrawal of U.S. stimulus measures. * Chile's peso ended 0.5 percent weaker against the dollar, one day after closing at its strongest level in a month, as foreign investors sought better carry-trade opportunities elsewhere. Latin American FX prices at 1905 GMT: Currencies daily % YTD % change change Latest Brazil real 2.2241 0.06 -8.28 Mexico peso 12.5215 -0.34 2.74 Chile peso 500.2000 -0.48 -4.30 Colombia peso 1884.9500 -0.46 -6.31 Peru sol 2.7680 -0.36 -7.84 Argentina peso 5.4475 -0.14 -9.82 Argentina peso 8.8000 -0.57 -22.95
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