August 5, 2013 / 3:01 PM / 4 years ago

EMERGING MARKETS-Brazil real weakens on US service sector data

3 Min Read

RIO DE JANEIRO, Aug 5 (Reuters) - Brazil's currency weakened
on Monday after data showed the pace of growth in the U.S.
service sector accelerated in July, giving a reason for the
Federal Reserve to cut down on its stimulus program.
    The Fed's bond-buying program injects $85 billion per month
into the U.S. economy but part of that money usually flows to
emerging markets as investors seek higher returns.
    But the Mexican peso held its ground, trading nearly
unchanged while the Chilean peso firmed 0.1 percent.
    The dollar rallied against major currencies while U.S.
Treasuries yields climbed higher after the Institute of Supply
Management (ISM) said its services index rose to 56 in July,
above economists' expectations for a 53 reading. 
    The data eased some of the economic concerns raised on
Friday by weaker-than-expected U.S. non-farm payrolls data.
    * The Brazilian real  added to early losses and
fell to as much as 2.3015 per dollar, a level that left
investors on watch for a possible central bank intervention. It
last traded 0.5 percent down for the day at 2.3005 reais to the
dollar.
    * Brazilian policymakers have been selling traditional
currency swaps, derivative contracts that emulate a sale of
dollars in the futures market, to provide hedge to investors or
companies fearing a further depreciation of the real.
    * The Mexican peso was practically unchanged at 12.67
per dollar after weakening to as much as 12.7036 minutes after
the U.S. services sector data was released.  
    * The Chilean peso  erased early losses and
gained 0.1 percent, however, after data showed the country's
economic activity expanded 4.2 percent in June from the a year
earlier, above economists' expectations. Latin
American FX prices at 1440 GMTCurrencies                     
Latestdaily % changeYTD % changeBrazil real             
2.3005-0.57-11.32Mexico peso            
12.66750.001.55Chile peso          
511.30000.14-6.38Colombia peso   
1882.55000.37-6.19Peru sol              
2.7890-0.07-8.53Argentina peso (interbank)      
5.51500.00-10.92Argentina peso (parallel)       
8.71000.57-22.16

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