EMERGING MARKETS-Mexico peso, Brazil real slump after Fed rally
MEXICO CITY, Sept 20 (Reuters) - Mexico's peso tumbled the most in nearly a month on Friday and Brazil's real weakened after comments from a Federal Reserve official cut into optimism that U.S. monetary stimulus could remain in place for some time. Latin American currencies still closed the week with big gains, helped by the Fed's announcement this week that it will keep its $85 billion monthly bond buying program in place for now. The stimulus has supported demand for riskier assets, but worries about the impact of the withdrawal of stimulus has spurred big losses in emerging market assets since May. St. Louis Fed President James Bullard on Friday told Bloomberg television that the Fed could scale back its stimulus at its October meeting, should data point to a stronger economy. "The market had been very content with the idea that this liquidity would continue, then you get this kind of comment and that puts the breaks on the optimism," said Mario Copca, a strategist at CI Banco in Mexico City. Mexico's peso shed more than 1 percent in its biggest one-day percentage drop since Aug. 26. Brazil's real slipped 0.89 percent, its worst daily loss in about three weeks. Still, both currencies ended stronger for the week, with the real adding about 2.8 percent and the Mexican peso gaining nearly 1.5 percent. Mexico's peso may have suffered on Friday from some concerns of another interest rate cut by the country's central bank, which could undermine the appeal of local assets to hungry investors. Minutes from the last meeting by Mexico's central bank, when it unexpectedly cut its main rate to 3.75 percent, showed policymakers were divided on the decision. However, the economic damage from historic floods hitting the country could strengthen bets for another cut in October, analysts said. For the week ending Sept. 17 - the Tuesday before the Fed's move - currency speculators piled on the biggest amount of bets on further losses in the peso since June 2012, according to data from the Commodity Futures Trading Commission released on Friday. Meanwhile, Brazil is likely to make a second offering of hard-currency bonds this year after the Fed's move renewed appetite among global investors for higher-yielding emerging-market paper, Schroders Plc fund manager James Barrineau told Reuters on Friday. Key Latin American currencies at 2100 GMT: Currencies daily % YTD % change change Latest Brazil real 2.2180 -0.81 -8.03 Mexico peso 12.8635 -1.19 0.01 Chile peso 502.1000 0.18 -4.66 Colombia peso 1895.9000 -0.68 -6.85 Peru sol 2.7490 -0.58 -7.20 Argentina peso 5.7600 -0.04 -14.71 Argentina peso 9.3700 0.32 -27.64
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