EMERGING MARKETS-Brazil real hits 2-month low, peso sinks

Tue Nov 5, 2013 7:51pm EST

MEXICO CITY, Nov 5 (Reuters) - Brazil's real slumped to a
2-month low on Tuesday and Mexico's peso sank to its weakest in
more than three weeks on bets that upcoming U.S. economic data
may encourage the Federal Reserve to withdrawal monetary
stimulus soon.
    U.S. service sector data on Tuesday showed faster growth
than expected in October, feeding speculation that the Fed may
start winding down its bond-buying program this year.
 
    Latin American currencies have weakened since last week amid
signs of more vigorous U.S. growth. A strong U.S. jobs report
for October on Friday could deepen bets the Fed will move soon.
    Fed stimulus has kept yields on U.S. Treasuries low, driving
investors to seek higher returns in emerging markets. Reduction
of the Fed's stimulus is expected to drain much of the tide of
investment that rolled into emerging markets.
    * The Brazilian real  slid 2 percent to 2.2887
per dollar, its weakest close since Sept. 9. 
    * 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 nearly 1.3 percent to 13.16
per dollar, its weakest level since Oct. 10. 
    * Higher taxes next year are likely to have little impact on
inflation, which is seen drifting slightly higher to around 3.5
percent next year, central bank chief Agustin Carstens said on
Tuesday. 
    * Tame price pressures are seen allowing Mexico's central
bank to hold its key rate at a record low of 3.5 percent well
into next year in order to support sluggish growth.

    Latin America FX prices at 2345 GMT:
    
 Currencies                          daily %    YTD %
                                      change   change
                             Latest           
 Brazil real                 2.2887    -1.97   -10.87
                                              
 Mexico peso                  13.16    -1.25    -2.25
                                              
 Chile peso                515.7000    -0.56    -7.17
                                              
 Colombia peso            1921.6500    -0.95    -8.10
                                              
 Peru sol                    2.7800     0.00    -8.24
                                              
 Argentina peso              5.9525    -0.17   -17.47

 Argentina peso              9.7900     0.92   -30.75
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