November 14, 2011 / 3:56 PM / 6 years ago

EMERGING MARKETS-LatAm FX weakens on fear of slow global economy

3 Min Read

* OECD report shows all major economies slowing
    * Merkel says Europe may be facing 'worst hour' since WWII
    * Mexican, Chile pesos, Brazilian real weaken vs dollar
    By Jeb Blount
    RIO DE JANEIRO, Nov 14 Reuters) - Latin America's
most-traded currencies weakened against the U.S. dollar on
Monday as evidence mounted that Europe's debt crisis is causing
the world's economies to slow.
    Brazil's real , the region's second-most traded
currency, weakened 1.18 percent to 1.7635 to the dollar. The
Mexican peso , Latin America's most-traded currency,
weakened 0.28 percent to 13.5355. Chile's peso 
weakened 0.50 percent to 500.20.
    All of the world's major economies will slow in the coming
months, the Organization for Economic Cooperation and
Development, a club of the countries with the largest market
economies, said on Monday.That is nearly three percentage points more than Italy paid
to sell similar debt at the beginning of the year.
    Italy needs to sell hundreds of billions of euros of new
bonds to refinance maturing debt in the coming years.
    "The feel-good factor we had last week with the new
governments in Italy and Greece moving to tackle their debt
problems is over," Thin said.
    Thin, though, sees a potential silver lining in the OECD
report's cloud.
    Growth in the United States, the world's largest national
economy, shows signs of outpacing other regions such as Europe,
and China, which, while slowing, will likely continue growing,
he said.
    "This could mean that the risks to emerging markets of the
European slowdown could be limited," he added.
    Benito Berber of Nomura Securities in New York sees this
week as a potentially positive one for Latin American
currencies if Greece and Italy move forward with the formation
of their new governments.
    "As long as it's a quiet week, this could be a good week
for risk assets in Latin America."
    Latin American currencies are "risk assets" because they
are less traded, or liquid, than those in U.S. dollars and
their price swings or volatility are higher than developed
world currencies.

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