EMERGING MARKETS-Latam currencies pull back after rally

Tue Nov 19, 2013 6:13pm EST

MEXICO CITY, Nov 19 (Reuters) - Latin American currencies
slipped on Tuesday after a recent rally, while the Chilean peso
weakened on bets that the central bank would cut interest rates,
which it did by a quarter of a percentage point after the market
close. 
    Mexico's peso pulled back from a three-week high while the
Brazilian real retreated from its strongest level against the
dollar in two weeks.
    Reports on U.S. retail sales, existing home sales and
consumer prices due on Wednesday will influence expectations
about when the U.S. Federal Reserve could start cutting back on
a bond-buying program that has increased investor appetite for
emerging markets over the past few years.
    Concerns of less U.S. stimulus pressured emerging market
currencies since May, but riskier assets rallied last week amid
bets that Janet Yellen, who is set to lead the Fed, will not
move quickly to cut bond purchases.
    * Brazil's real  shed 0.44 percent to 2.2770
per dollar after rallying over 2 percent on Monday. The currency
had been backed by steady central bank intervention in the
currency market.
    * Brazilian policymakers have been regularly selling
currency swaps to provide investors with protection against a
possible depreciation of the real. On Tuesday, they sold 10,000
swaps as part of their daily intervention program, as well as
20,000 swaps to roll over about $10.1 billion in similar
contracts that mature on Dec 2. So far, the central bank has
renewed about half of the expiring swaps. 
    * Chile's peso dropped 0.42 percent to its weakest
in 1-1/2 weeks ahead of a central bank decision. 
    * After the close of the local currency market, Chile's
central bank cut its key interest rate by a quarter of a
percentage point to 4.50 percent on Tuesday, the second
reduction in as many months, to try to stimulate a cooling
economy. 
    * Weakening prices for copper, Chile's main export product,
also weighed on the country's currency.
    * Mexico's peso  dipped 0.57 percent to
12.9695 per dollar.

    
 Latin American currencies at 2240 GMT
 Currencies                          daily %    YTD %
                                      change   change
                             Latest           
 Brazil real                 2.2770    -0.44   -10.41
                                              
 Mexico peso                12.9695    -0.57    -0.81
                                              
 Chile peso                519.5000    -0.42    -7.85
                                              
 Colombia peso            1920.6500    -0.12    -8.05
                                              
 Peru sol                    2.8010     0.00    -8.93
                                              
 Argentina peso              6.0350    -0.50   -18.60

 Argentina peso              9.8800    -0.10   -31.38
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.