* Bernanke keeps hopes alive of further Fed stimulus
* Euro-zone worries seen keeping pressure on Latam FX
* Chile's peso hits 14-month low on copper's rout
By Michael O'Boyle and Jean Luis Arce
MEXICO CITY, Oct 4 Mexico's peso gained on
Tuesday after the head of the U.S. Federal Reserve raised
hopes of more economic stimulus, but Chile's peso slid to a
14-month low on a rout in copper prices.
Mexico's peso advanced and U.S. stocks cut losses after
Fed Chairman Ben Bernanke said the central bank is prepared to
act further to help the economy of the United States, which is
Mexico's top trading partner. [ID:nW1E7KM007]
"The signal that the Fed could take more action down the
line is what gave markets a bit of a boost," said Alejandro
Padilla, an analyst at Banorte-Ixe in Mexico City.
Mexico's peso MXN=MXN=D2 rose 0.77 percent to 13.96
per dollar. Four straight sessions of steep losses had taken
it within striking distance of a more than two-year low.
But analysts said the peso and Latin American currencies
would remain vulnerable to more losses. The euro zone's debt
troubles will likely push investors to keep dumping riskier
assets, such as emerging market currencies and debt, analysts
"In the medium term, the issue of Europe is going to keep
weighing. There is clearly the worry about whether Greece will
be able to meet its obligations," Padilla said.
European finance ministers are considering making banks
take bigger losses on Greek debt and have postponed a vital
aid payment to Athens until mid-November, setting up a moment
of truth in the euro zone's sovereign debt crisis.
Investors fear another financial crisis could further drag
down global growth just as the U.S. and European economies are
already slowing down.
Brazil's real BRBY bid 0.18 percent firmer at 1.8870 per
dollar, helped by an auction of currency swap contracts that
mimic the purchase of dollars in the futures market and
provide investors with insurance against declines in the value
of the real. [ID:nN1E7930UT]
Brazil's central bank has been intervening in its currency
market to bolster the real, and some analysts think
authorities could step up efforts to support the local
currency if it breaks 1.90 per dollar.
Brazil's real has slumped about 18 percent since late
July. The currency was undercut in August after the central
bank made a surprise move to cut interest rates, curbing the
appeal of the currency to yield-hungry investors.
Expectations that Brazil could further relax monetary
policy are sapping support for the currency. The real had been
a favorite bet for emerging market investors due to the
country's high interest rates for much of the recovery from
the 2008 financial crisis.
Meanwhile, Mexican authorities have recently suggested
they will not intervene in the market to support the peso.
Mexico's peso has shed around 16 percent since late July.
Chile's peso CLP=CL shed 1.8 percent to bid at 534.70
per dollar as prices for copper, the country's main export,
continued to slump, also trading near a 14-month low
"There is no recovery in copper, so there will be no
respite for the peso," said Daniel Soto, an analyst at Forex
Chile's peso has lost 17 percent since late July.
(Additional reporting by Froilan Romero in Santiago; Editing
by Jan Paschal)