EMERGING MARKETS-Latam currencies sink as Fed stimulus eyed

Mon Nov 11, 2013 3:32pm EST

MEXICO CITY, Nov 11 (Reuters) - Latin American currencies
slumped on Monday amid bets that improving U.S. data will push
the Federal Reserve to soon cut back its monetary stimulus that
has driven demand for emerging market assets.
    Brazil's real sank to its weakest in two months despite the
prospect of more intervention from the country's central bank to
prop up the currency, while Mexico's peso also slipped, trading
just stronger than a low it hit last week.
    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 that had supported investor
appetite for emerging market assets in recent years.
    Strong U.S. jobs data on Friday added to bets that the Fed
could cut back stimulus sooner than expected. A Reuters survey
last week showed that more U.S. primary dealers now expect the
Fed to trim bond purchases before March. 
    * Brazil's real initially strengthened on Monday
after the central bank on Friday said it would start rolling
over currency swaps maturing in December. Brazilian policymakers
have been regularly selling swaps as part of a daily
intervention program that provides investors with a hedge
against a possible depreciation of the real, helping reduce
demand for dollars on the spot market.
    * Details of the rollovers, which begin Tuesday, are due to
be released by the central bank later on Monday, though no
specific time has been set. 
    * But gains in the real were short-lived, and the currency
closed down 0.54 percent at 2.3296 per dollar, its weakest since
Sept. 4.
    * The Mexican peso shed 0.42 percent to 13.2150 per
dollar.
    * Mexican industrial output slumped in September by the most
in nine months, casting doubt on the strength of a nascent
recovery in Latin America's No. 2 economy. 
    * The peso currency is down more than 2 percent this year
but it is expected to outperform the real over the next 12
months as investors remain optimistic about prospects for
economic reforms being pushed through Congress, a Reuters poll
showed last week. 


    Latin America FX prices at 2000 GMT:
    
 Currencies                            Daily  YTD pct
                                         pct   change
                             Latest   change  
 Brazil real                 2.3296    -0.54   -12.43
                                              
 Mexico peso                13.2150    -0.42    -2.65
                                              
 Chile peso                521.0000    -0.36    -8.12
                                              
 Peru sol                    2.8000     0.00    -8.89
                                              
 Argentina peso              5.9700    -0.08   -17.71

 Argentina peso              9.7500     0.51   -30.46
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