EMERGING MARKETS-Brazil leads Latam currencies down on Fed fears

Thu Oct 31, 2013 5:43pm EDT

RIO DE JANEIRO, Oct 31 (Reuters) - Brazil's real weakened by
the most in over two months on Thursday, leading Latin American
currencies down as recent U.S. economic data fueled fears that
the Federal Reserve may start winding down its stimulus program
later this year.
    The Brazilian real shed nearly 2 percent, as investors
betting on the currency's weakening gained the upper hand during
the settlement of an official month-end exchange rate known as
Ptax, a reference for contracts in Brazil.
    Concerns about an early withdrawal of U.S. stimulus gained
steam on Wednesday after some traders interpreted the Fed's
latest policy statement, which said downside risks to the
economy had lessened, as slightly more hawkish.
    Thursday's economic data, including a surprisingly strong
report on U.S. Midwest business activity, added to concerns.
 
    The Fed's bond-buying program currently injects $85 billion
a month into the U.S. economy, and some of those funds often
make their way into higher-yielding emerging markets. 
    * The Brazilian real  lost 1.93 percent to
2.2336 per dollar, its biggest decline since Aug. 21 and the
weakest level since late September. 
    * A report showed Brazil's primary budget deficit swelled to
its biggest in nearly five years in September. Analysts saw the
data as a sign of heightened government spending that could fuel
inflation and force the central bank to further tighten monetary
policy. 
    * The Mexican peso slid 0.73 percent to 13.019 per
dollar, beyond the 13 per dollar level that has proven to be a
key resistance level during the past three weeks.


    Latin America FX prices at 2113 GMT:
    
 Currencies                                   daily %      YTD %
                                               change     change
                                    Latest             
 Brazil real                        2.2336      -1.93      -8.67
                                                       
 Mexico peso                        13.019      -0.73      -1.19
                                                       
 Chile peso                       506.9000       0.36      -5.56
                                                       
 Colombia peso                   1892.3500      -0.49      -6.68
 Peru sol                           2.7720      -0.51      -7.97
                                                       
 Argentina peso (interbank)         5.9100      -0.08     -16.88
                                                       
 Argentina peso (parallel)          9.8800       0.51     -31.38