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EMERGING MARKETS-Mexico peso falls as dollar-sale mechanism halted
April 8, 2013 / 10:07 PM / 5 years ago

EMERGING MARKETS-Mexico peso falls as dollar-sale mechanism halted

* Mexico suspends dollar auction mechanism after hitting
20-month high
    * Japan stimulus continues to support Latam currencies
    * Brazil real ends flat as investors take profit

    By Walter Brandimarte
    SAO PAULO, April 8 (Reuters) - The Mexican peso fell on
Monday as the government suspended a dollar-sale mechanism
designed to prevent a sharp currency depreciation, while the
Brazilian real ended little changed after weakening on Friday
past the 2-per-dollar mark for the first time in two weeks.
    Bets that Japan's unprecedented monetary stimulus will
support capital inflows into higher-yielding emerging market
economies boosted other Latin American currencies. 
    The Chilean peso rose 0.4 percent to 466.90 per
dollar, its strongest level in more than one-and-a-half years,
nearing levels that prompted the central bank to launch a
dollar-purchasing program in early 2011. 
    In Mexico, the peso initially hit a 20-month high of
12.1265 per dollar during the session but erased all of those
gains after the government said it was suspending a mechanism of
automatic dollar auctions triggered by sharp currency losses.
 
    The peso briefly fell past 12.20 per dollar, settling around
12.1870 per greenback later, as analysts viewed the measure as
increasing risks for investors who have been decidedly betting
on a stronger currency.
    "I do expect some clear-out of the (long Mexican peso)
positions," said Flavia Cattan-Naslausky, a currency strategist
with RBS.
    On the other hand, the Brazilian real  ended
practically unchanged at 1.9860 per dollar. 
    It initially rose slightly on expectations that Japan's
monetary stimulus would translate into additional capital
inflows to Brazil, gains were not sustained as investors later
decided to pocket some profits.
        
    Latin American FX prices at 2150 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                1.9860     0.03     2.72
                                             
 Mexico peso               12.1850    -0.08     5.57
                                             
 Chile peso               466.9000     0.41     2.53
                                             
 Colombia peso           1816.6000     0.19    -2.79
                                             
 Peru sol                   2.5760     0.19    -0.97
                                             
 Argentina peso             5.1325     0.05    -4.29

 Argentina peso             8.3000     1.20   -18.31

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