* Measure by Fed and others seen spurring more capital flows
* Export-dependent countries' currencies seen strengthening
* Financial ministers say measures hurt region's
* But diverse region doesn't have common response
VINA DEL MAR, Chile, Dec 14 Latin America is
worried stimulus measures in the developed world will trigger
more capital flows that could further strengthen the
commodities-dependent region's currencies, its finance ministers
said on Friday.
The U.S. Federal Reserve's fresh round of monetary stimulus
could dent Latin America's competitiveness by making its exports
more expensive, according to a statement by the Community of
Latin American and Caribbean States, or CELAC.
They urged the developed world to take into account "those
still on the road to development" in their policies, which they
said have hurt the region, a major metals and grains exporter.
But nations in the diverse region - which range from
investor darling Chile to socialist Venezuela - don't share a
common vision of how to tackle these flows, Chilean finance
minister Felipe Larrain said at the end of the CELAC meeting,
which the International Monetary Fund Managing Director
Christine Lagarde attended.
"While measures to spur the economies of the developed world
are welcome, we express our concern with regards to the monetary
expansion in those countries and their effect on our region...
given the pressure on our currencies that affect the
competitiveness of most of our countries," the CELAC statement
Emerging markets have blamed loose monetary policies in rich
nations for spurring destabilizing flows of hot money, and the
IMF is trying to forge a consensus on when it makes sense for
nations to resort to capital curbs. [ID :nL1E8N304O]
Larrain called capital controls "the last alternative,"
saying macro prudential measures and foreign exchange coverage
can help face the inflow.
Regional powerhouse Brazil shocked investors in October 2009
by imposing taxes on some categories of foreign investment flows
to local stocks and fixed-income securities. Back then, it said
some of the flows constituted hot money and were harming the
Capital flows have been "a central part of the (summit's)
discussion," Peruvian Finance Minister Castilla told Reuters on
Friday on the sidelines of the meeting.
"The discussion involves the convenience or not of adopting
capital controls or other policies that can mitigate significant
entry of foreign capital flows," Castilla said.
"The other important discussion was (centered on) a way of
mitigating a stronger exchange rate by pushing contractive
fiscal policies, and whether it's worth doing that, taking into
account the needs these countries have," he added.
Chile's peso, for instance, has strengthened 8.83
percent this year against the U.S. dollar. It ranks behind the
Hungarian forint and the Polish zloty as one of the strongest
foreign currency performers against the dollar among 152
currencies tracked by Reuters.
Investors chasing returns have also been lured by brisk
growth in much of Latin America, as the debt crisis drags on in
Europe and the United States' economic recovery remains tepid, .
The economy of Latin America and the Caribbean will likely
grow by 3.8 percent in 2013, less than previously forecast, as
slower growth in Mexico weighs against a recovery in Brazil and
Argentina, the United Nations said earlier this month.
But the export-dependent region's growth is seen picking up
pace next year from a downwardly revised 3.1 percent expansion
in 2012, largely defying the effect of the lingering euro zone
debt woes and fallout from softer demand from key trade partner