EMERGING MARKETS-Latin American currencies rise on US debt deal bets

Fri Oct 11, 2013 7:13pm EDT

MEXICO CITY, Oct 11 (Reuters) - Mexico's peso rose on Friday
to a 2-1/2 week high and Brazil's real hit its strongest level
in nearly four months as investors bet that the U.S. Congress
will reach an agreement to avert a devastating debt default.
    Riskier assets such as emerging market currencies could
extend gains next week if U.S. lawmakers put an end to the
government shutdown and increase the U.S. borrowing limit.
    Failure to raise the limit could spur an unprecedented U.S.
debt default that could throw global markets into crisis. 
    * The Brazilian real  firmed 0.15 percent to its
strongest close since mid-June. Expectations that the central
bank will raise interest rates more aggressively, increasing the
allure of assets denominated in the local currency, also boosted
the real.
    * Yields on Brazilian interest-rate futures edged
higher the central bank will keep raising interest rates toward
double digits. 
    * Mexico's peso gained 0.94 percent to 12.9830 per
dollar, strengthening past the psychological 13-per-dollar
level.
    * The cost of dollars in Mexican pesos fell below its 50-day
moving average, which could bode for further peso gains.
    * Yields on Mexican peso debt fell sharply,
backed by bets that Mexico could cut its benchmark interest rate
in October. 
    * While most economists expect the central bank to cut its
main rate by 25 basis points to 3.5 percent on Oct. 25, but some
are starting to bet on a half-percentage point cut.       

    Latin America FX prices at 2200 GMT:
    
 Currencies                          daily %    YTD %
                                      change   change
                             Latest           
 Brazil real                 2.1771     0.15     -6.3
                                              
 Mexico peso                12.9830     0.94    -0.92
                                              
 Chile peso                497.8000    -0.18    -3.84
                                              
 Colombia peso            1881.7800     0.26    -6.15
                                              
 Peru sol                    2.7660     0.14    -7.77
                                              
 Argentina peso              5.8300     0.00   -15.74

 Argentina peso              9.6900     1.03   -30.03
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