EMERGING MARKETS-Brazil real hits 2-month low on unease over Fed

Tue Nov 5, 2013 10:37am EST

RIO DE JANEIRO, Nov 5 (Reuters) - The Brazilian real led
Latin American currencies lower on Tuesday, falling 2 percent to
its weakest level since early September, as investors grew
anxious that upcoming U.S. economic data may support the case
for an early withdrawal of U.S. stimulus.
    Stronger-than-expected U.S. data last week triggered a
sell-off in Latin American currencies, leaving investors
wondering if the U.S. economy will again show unexpected
robustness in Thursday's third-quarter U.S. gross domestic
product numbers and Friday's non-farm payrolls for October.
    On Wednesday, a report showing the U.S. service sector grew
faster than expected in October added to speculation that the
U.S. Federal Reserve may start winding down its bond-buying
program later this year, reducing investors' appetite for risk.
 
     "Markets are worried about the Fed, whether there will be a
reduction in stimulus or not, and waiting for Friday's jobs
numbers," said Reginaldo Galhardo, a manager at the currency
desk of Treviso brokerage in Sao Paulo.
    The Fed's program injects $85 billion a month into the U.S.
economy, and part of that money often finds its way to emerging
markets as investors seek higher yields.
  
    * The Brazilian real  slid 2 percent to 2.2925
per dollar, its weakest level since Sept. 11. 
    * Traders speculated that the Brazilian central bank, in an
attempt to cushion the real's losses, could step up its market
intervention by offering to roll over currency swaps that mature
in the beginning of December.
    * The Mexican peso lost 1.3 percent to 13.1685 per
dollar, its weakest level since Oct. 10. 

    Latin America FX prices at 1504 GMT:
    
 Currencies                        daily %    YTD %
                                    change   change
                           Latest           
 Brazil real               2.2925    -2.13   -11.01
                                            
 Mexico peso              13.1685    -1.32    -2.31
                                            
 Chile peso              515.3000    -0.49    -7.10
                                            
 Colombia peso          1917.7000    -0.75    -7.91
                                            
 Peru sol                  2.7800     0.00    -8.24
                                            
 Argentina peso            5.9550    -0.21   -17.51

 Argentina peso            9.7500     1.33   -30.46
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A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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