EMERGING MARKETS-Latin American currencies whipsaw after U.S. data

Fri Nov 8, 2013 5:10pm EST

MEXICO CITY, Nov 8 (Reuters) - Latin American currencies
bounced back after deep losses on Friday, but analysts said they
were still vulnerable to further weakness on bets the U.S.
Federal Reserve could soon cut back stimulus.
    The Brazilian real slumped to a two-month low while the
Mexican peso hit its weakest in five weeks after the U.S. Labor
Department said employers added 204,000 new jobs to their
payrolls in October, well above the 125,000 new posts expected
by economists. 
    Latin American currencies have slumped in recent months on
expectations the Fed will begin to roll back its $85
billion-per-month of bond purchases. The stimulus had supported
investor appetite for emerging market assets in the recovery
from the 2008-09 financial crisis. 
    * The Brazilian real  pared losses after
hitting  its weakest level since early September to close down
nearly 0.5 percent at 2.3170. The currency is down 12 percent
this year.
    * Traders speculated the Brazilian central bank, in an
attempt to cushion the real's losses and avoid inflation
pass-through, could step up its market intervention by offering
to roll over currency swaps that mature in the beginning of
December. 
    * The Mexican peso firmed 0.36 percent to 13.1795 per
dollar, bouncing back from a 0.78 percent loss after the U.S.
data.
    * The peso has slumped in recent months due to expectations
that less Fed stimulus could push foreign investors to abandon
positions in the peso-denominated debt market.
    * Yet stronger U.S. growth is also good for the Mexican
currency, as it bodes well for stronger demand in the United
States for exports from Latin America's second largest economy. 
    * Minutes from the last decision of Mexico's central bank
released on Friday showed the move to cut the country's rate to
an all time low of 3.5 percent was unanimous. The minutes also
showed that all board members agreed growth had picked up and
further interest rate cuts would not be needed. 


    Latin America FX prices at 2115 GMT:
 Currencies                            Daily  YTD pct
                                         pct   change
                             Latest   change  
 Brazil real                 2.3170    -0.48    -12.0
                                              
 Mexico peso                13.1795     0.36    -2.39
                                              
 Chile peso                519.1000    -0.37    -7.78
                                              
 Colombia peso            1922.7500     0.31    -8.15
                                              
 Peru sol                    2.8000    -0.21    -8.89
                                              
 Argentina peso              5.9625    -0.29   -17.61

 Argentina peso              9.7600     0.31   -30.53
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