EMERGING MARKETS-Latam FX little changed as Fed offers no tapering clues

Wed Jul 31, 2013 3:43pm EDT

RIO DE JANEIRO, July 31 (Reuters) - Latin American
currencies were little changed on Wednesday, trimming most of
their early losses, after U.S. policymakers offered no
indication that they are about to cut back on stimulus measures
that have been supporting appetite for high-yielding assets.
    Speculation that the U.S. Federal Reserve was about to taper
its bond-buying program grew after data released early on the
day showed the U.S. economy unexpectedly accelerated in the
second quarter. 
    The data showed U.S. gross domestic product expanded at a
1.7 percent annual rate in the second quarter, above the 1
percent rate forecast by economists and up from the first
quarter's downwardly revised 1.1 percent expansion pace. 
    The U.S. economic picture was also brightened by a report
showing the U.S. private sector added 20,000 jobs in July.
    Latin American currencies have been selling off in recent
weeks on fears that the Fed may soon cut back on its bond-buying
program, which for years has provided a steady source of
greenbacks seeking higher returns in emerging markets.
    But, at the end of its two-day meeting, the Fed said the
economy is still in need of support and that it will keep buying
$85 billion in mortgage and Treasury securities per month.
       
    * The Brazilian real  was little changed at
2.2797 per dollar after sliding to as much as 2.3022 per
greenback, its weakest level since April 1, 2009.
    * Also supporting the real was strong intervention by the
central bank, which called three auctions to sell traditional
currency swaps, derivative contracts that provide investors with
protection against currency depreciation. 
    * Brazil's central bank sold a total of 45,300 traditional
currency swaps in the first two auctions but found no demand for
the swaps offered at a third auction. The action suggested
policymakers are not willing to allow the real to weaken past
2.3 per dollar. 
    * The Mexican peso dropped 0.1 percent to 12.773 per
dollar, after weakening more than 1 percent earlier. 
    * The Chilean peso  bucked the trend and
ended 0.3 percent stronger before the Fed statement, supported
by a rise in the prices of copper, the country's main export
product.


    Latin American FX prices at 1925 GMT      
 Currencies                           Daily  YTD pct
                                        pct   change
                            Latest   change  
 Brazil real                2.2797    -0.03   -10.51
                                             
 Mexico peso               12.7750    -0.11     0.70
                                             
 Chile peso               513.4000     0.33    -6.76
                                             
 Colombia peso           1894.0000    -0.20    -6.76
                                             
 Peru sol                   2.7940    -0.39    -8.70
                                             
 Argentina peso             5.5050    -0.09   -10.76

 Argentina peso             8.6000     0.35   -21.16
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