EMERGING MARKETS-Most Latam currencies down on U.S. data fears

Mon Oct 21, 2013 1:21pm EDT

RIO DE JANEIRO, Oct 21 (Reuters) - Most Latin American
currencies weakened on Monday as investors grew anxious before
the release of key U.S. unemployment data delayed by a 16-day
partial government shutdown this month.
    A notable exception was the Brazilian real, which was steady
ahead of a central bank's decision on whether to roll over some
$8.9 billion worth of currency swaps, derivatives that
policymakers have been selling to shore up the real.
    The U.S. nonfarm payroll data for September, which will be
released on Tuesday at 1230 GMT, could put the focus back on the
timing of an expected withdrawal of U.S. stimulus measures,
likely determining investor appetite for risky emerging-market
assets over the next few months.
    Latin American currencies rallied earlier this month as
investors bet the Fed would keep the stimulus in place longer to
offset the negative economic impact of the government shutdown.
    "The emerging market rally started before the agreement on
the U.S. budget and debt ceiling, such that it was 'buy on
rumor' and 'sell on fact,' with no obvious relief rally after
resolving the event risk", Siobhan Morden, head of Latin America
strategy at Jefferies, wrote in a research note.
    * The Mexican peso dropped 0.8 percent, also
pressured by data showing retail sales fell in August from the
previous month, supporting bets that the central bank will lower
interest rates this week. 
    * Most analysts expect the Mexican central bank to cut its
benchmark interest rate for the second month in a row on Friday,
by 25 basis points to 3.5 percent, to support the economy.
 
    * The Brazilian real  was steady at 2.1745 per
dollar, however, as investors awaited the results of a central
bank survey to gauge market demand for the roll-over of about
$8.9 billion worth of currency swaps.
    * Brazil's central bank will conduct the survey after the
market closes on Monday. If it decides to roll over the swaps,
it will auction new contracts on Tuesday, Wednesday and
Thursday, the bank said on Friday.
    * Some analysts believe Brazil's central bank might chose to
roll over only part of the expiring swaps  to remove part of the
support given to the real, which has been trading near its
strongest level in about four months.
    *     

    Latin America FX prices at 1635 GMT: 
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.1745     0.02    -6.19
                                             
 Mexico peso               12.9595    -0.84    -0.74
                                             
 Chile peso               501.8000    -1.02    -4.60
                                             
 Colombia peso           1887.1500    -0.28    -6.42
                                             
 Peru sol                   2.7770    -0.40    -8.14
                                             
 Argentina peso             5.8600    -0.09   -16.17

 Argentina peso             9.8100     0.71   -30.89
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