UPDATE 1-Latam trade bloc seeks to avoid currency volatility -Peru

Fri Aug 23, 2013 5:53pm EDT

SANTIAGO Aug 23 (Reuters) - The Pacific Alliance countries, made up of Chile, Colombia, Mexico and Peru, are seeking to avoid excessive volatility in their currencies, Peruvian finance minister Luis Miguel Castilla said on Friday during a meeting of the bloc in Santiago.

Emerging market currencies have come under heavy selling pressure recently following signals from the U.S. Federal Reserve that it might dial back its bond-buying stimulus program.

"What we all want to avoid is excessive volatility and that I think is something we have in common," said Castilla, flanked by Chile's finance minister, Felipe Larrain, Colombian finance minister Mauricio Cardenas and Mexico's finance minister, Luis Videgaray.

Investors have been lured by an economic boom in much of Latin America as opposed to the developed world's largely tepid growth rates.

The capital flows have strengthened many currencies in the region, but have also caused headaches for exporters in commodities rich Latin America.

Expectations that the U.S. Federal Reserve might soon wind down stimulus measures have battered many emerging currencies recently. The Peruvian sol, for instance, has depreciated more than 10 percent this year.

Cardenas said on Friday that a weaker Colombian peso was not a problem for the Andean country.

The Pacific Alliance, formed last year, aims to integrate free markets in trade, energy and infrastructure, and bolster ties with key trading partner Asia.

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