EMERGING MARKETS-Mexico peso rallies as cenbank signals no more rate cuts

Fri Oct 25, 2013 5:28pm EDT

RIO DE JANEIRO, Oct 25 (Reuters) - Mexico's peso rallied on
Friday after the country's central bank lowered its benchmark
interest rate as expected and said no more cuts were
recommended, boosting investor appetite for the currency.
    Meanwhile, in Brazil, the real rose more than half a
percentage point after policymakers announced they will continue
to roll over currency swaps that expire early next month,
providing additional support to the exchange rate.
    Over the past few days, Latin American currencies in general
have been supported by bets that the U.S. Federal Reserve will
delay the unwinding of its bond-buying program, which has
supported investors' appetite for higher-risk emerging market
assets.
    * The Mexican peso jumped 0.74 percent to 12.8800 per
dollar after the central bank said no more interest rate cuts
would be "advisable in the foreseeable future," as the economy
appears to have already suffered the worst of a recent slowdown.
 
    * The statement by the Mexican central bank came with a
widely-expected decision to cut its benchmark interest rate by
25 basis points to 3.5 percent. The Mexican peso had weakened in
the past few days as investors priced in interest rate cuts that
could reduce the currency's allure.   
    * Brazil's real  firmed 0.58 percent to 2.1879
per dollar after the central bank announced last night that it
will continue to roll over currency swaps maturing on Nov. 1
with three auctions next Monday, Tuesday and Wednesday. Such
swaps provide investors with protection against a depreciation
of the real.
    * The announcement surprised many investors who thought
Brazilian policymakers would not announce additional auctions to
renew all of the $8.9 billion worth of currency swaps that
expire early next month. Bets on a partial roll-over increased
as the real recently traded at four-month highs.
    * Brazil's central bank has so far rolled over nearly $3
billion of the swaps maturing in November. It has still not
announced how many swaps it will offer during next week's
auctions. 
    * Brazil has been regularly selling currency swaps and
dollar repos as part of a daily intervention program designed to
stabilize the currency market. The central bank said on Friday
it has sold $4 billion through repurchase agreements in the
month through Oct. 23. 
    * The Chilean peso lost 0.4 percent.

    Latin America FX prices at 2036 GMT: 

 Currencies                                 Daily pct    YTD pct
                                               change     change
                                    Latest             
 Brazil real                        2.1879       0.58      -6.76
 Mexico peso                       12.8800       0.74      -0.12
 Chile peso                       505.5000      -0.40      -5.30
 Colombia peso                  1,882.5500      -0.07      -6.19
 Peru sol                           2.7590       0.07      -7.54
 Argentina peso (interbank)         5.8825      -0.21     -16.49
                                                       
 Argentina peso (parallel)         10.0600       0.20     -32.60
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