By Walter Brandimarte
RIO DE JANEIRO, June 20 Latin American
currencies dropped sharply on Thursday as markets continued to
reel from the U.S. Federal Reserve saying on Wednesday that it
may scale back its stimulus measures.
Economic data on Thursday showing Chinese factory activity
fell to a nine-month low in June added to the sense of global
unease as investors feared emerging market countries will also
suffer from falling demand and prices for their commodities
The selling in currencies on Thursday extended Wednesday's
losses as investors continued to digest the implications of the
Fed's actions, which could reduce global liquidity.
Fed Chairman Ben Bernanke said the bank's stimulus program,
which for years has been providing a steady source of dollars
seeking higher returns in emerging markets, will likely be
reduced this year and finished by mid-2014.
* Brazil's real lost more than 2 percent to hit
an intraday low of 2.275 per dollar, its weakest level in more
than four years. The currency has lost nearly 12 percent since
the beginning of May, complicating government efforts to rein in
* Brazil's central bank intervened heavily in the market but
was unable to prop up the currency. Policymakers initially sold
traditional currency swaps, which offer protection against
possible additional losses in the real. In the afternoon, they
offered to sell greenbacks directly on the spot market with
repurchase agreement, in a strategy to provide temporary dollar
liquidity to the market.
* Mexico's peso slid more than 1 percent to as much
as 13.457, its weakest level since August 2012, leaving
investors on watch for a possible central bank intervention.
* Chile's peso ended 2.8 percent lower at 513.90
per dollar, its weakest level since the beginning of June 2012.
* Colombia's peso slumped 2.3 percent, its
largest single-day loss since December 2010, increasing losses
in the year-to-date to nearly 9 percent.
Latin American FX prices at 1910 GMT:
Currencies daily % YTD %
Brazil real 2.2616 -1.85 -9.80
Mexico peso 13.3800 -1.27 -3.86
Chile peso 513.9000 -2.80 -6.85
Colombia peso 1939.7200 -2.25 -8.96
Peru sol 2.7900 -1.72 -8.57
Argentina peso 5.3475 -0.09 -8.13
Argentina peso 8.5200 0.35 -20.42