August 20, 2013 / 10:31 PM / 5 years ago

EMERGING MARKETS-Latam currencies rebound as U.S. yields fall

RIO DE JANEIRO, Aug 20 (Reuters) - Latin American currencies halted a prolonged selloff on Tuesday as U.S. Treasury debt yields dropped for the first time in more than a week, bringing at least temporary relief to investors worried about an expected withdrawal of U.S. stimulus measures.

Major regional currencies, such as the Mexican peso and the Brazilian real , posted gains for the first time in at least seven sessions as U.S. benchmark 10-year Treasury note yields dropped to 2.82 percent from Monday’s close of 2.88 percent.

Investors had been dumping emerging market currencies in the past few days as expectations that the U.S. Federal Reserve will cut back on its bond-buying program have sent Treasury yields soaring to two-year highs, reducing the allure of higher-yielding assets globally.

Analysts said, however, that Tuesday’s recovery could prove to be temporary as investor jitters are not going away anytime soon.

Crucial for investors’ expectations about the future of U.S. stimulus measures will be the release on Wednesday of minutes of the Fed’s latest monetary policy meeting.

* The Brazilian real ended 0.9 percent stronger after slumping some 6 percent over six consecutive sessions of losses. The currency was also supported by the central bank’s active intervention amid policymakers’ heightened rhetoric against speculators.

* In a strategy to shore up the currency, Brazil’s central bank intervened in both the futures and spot markets, selling traditional currency swaps and spot dollars through repurchase agreements.

* The Mexican peso rose 0.7 percent after seven straight sessions of losses, even as data showing an unexpected economic contraction in the second quarter disappointed economists.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below