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EMERGING MARKETS-Latam currencies weaken on Greece anxiety
November 27, 2012 / 1:25 AM / 5 years ago

EMERGING MARKETS-Latam currencies weaken on Greece anxiety

* Latam currencies weighed down by fears over Greece
    * Brazil real's losses curbed by intervention concerns
    * Mexican peso down 0.32 pct, Brazilian real flat


    By Natalia Cacioli and Jean Arce
    SAO PAULO/MEXICO CITY, Nov 26 (Reuters) - Latin American
currencies edged lower on Monday on uncertainty over Greek aid
negotiations, which resulted in a debt-cutting agreement reached
too late in the day to boost the region's foreign exchange
markets.
    The Chilean peso lost 0.6 percent while the Mexican
peso  fell 0.32 percent on the Greek uncertainty.
    The Brazilian real  was mostly flat amid
expectations that the central bank could again intervene in the
market if the currency weakens toward the level of 2.1 per
dollar. 
    But most investors were eyeing Brussels, where euro zone
finance ministers and the International Monetary Fund finally
clinched an agreement on a new debt target for Greece, a
significant step toward releasing another tranche of loans to
the near-bankrupt economy. 
    Mexico's peso has firmed more than 2 percent from a 2-1/2
month low hit earlier this month, supported by easing concerns
about fiscal negotiations in the U.S. Congress and appetite for
the country's higher-yielding debt.
    But U.S. President Barack Obama's rejection on Monday of a
Republican suggestion for avoiding the "fiscal cliff" has some
analysts far from sanguine on the peso's near-term prospects.
    "We remain pretty neutral on the (Mexican) peso ... but we
still think there is room for disappointment in terms of peso
volatility," said Delia Paredes, a strategist at Banorte-IXE in
Mexico, citing "signs of disagreement in the U.S." 
    She expects the Mexican peso to trade between 12.87 and
13.10 per dollar this week.
    The White House on Monday threw cold water on a Republican
proposal for solving the so-called "fiscal cliff" by limiting
tax deductions and loopholes, instead of allowing taxes to rise
for the highest earners in the United States. 
       
    REAL'S NEW TRADING BAND?
    The Brazilian real closed nearly flat, weakening only 0.03
percent to 2.0818 per greenback as investors digested
conflicting signs from policymakers about the future of the
country's foreign exchange policy.
    The real on Friday posted its largest single-day gain in
nearly three months after the central bank stepped into the
market to halt losses that were partly fueled by comments from
Finance Minister Guido Mantega.
    Speaking to business leaders in Sao Paulo, Mantega said
Brazil's exchange rate was at a "reasonable though not totally
satisfactory level" to support industry. His remarks drove the
real as low as 2.1168 per dollar, its weakest level in 3-1/2
years.
    The apparent tug of war between the central bank and Mantega
left investors wondering whether policymakers still uphold an
informal trading band of 2.0-2.1 per dollar, where the real has
been stuck since early July.
    "I believe the market is still digesting that intervention,"
said Luiz Fernando Genova, a trader with Banco Daycoval in Sao
Paulo. "We have seen the real weakening lately, but it's still
too early to say they will change this band."     
    
    Latin America FX prices at 12:53 AM GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.0818    -0.03   -10.25
                                             
 Mexico peso               13.0215    -0.32    7.280
                                             
 Argentina peso*            6.4400    -0.47   -26.55
                                             
 Chile peso               481.5000    -0.60     7.85
                                             
 Colombia peso          1,825.0000    -0.07     6.21
                                             
 Peru sol                   2.5880     0.00     4.21
                                             
 * Argentine peso's rate between                    
 brokerages

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