Reuters: US Dollar Report: EMERGING MARKETS-Latam forex gains on Dutch optimism, US data

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EMERGING MARKETS-Latam forex gains on Dutch optimism, US data Apr 24th 2012, 21:26 Tue Apr 24, 2012 5:26pm EDT * Brazil's real near flat, Mexico's peso gains 0.15 percent * Brazil real curbs gains after central bank auction * Peru sol hits new 15-year high By Caroline Stauffer LIMA, April 24 (Reuters) - Latin America's currencies strengthened in choppy trading on Tuesday after better-than-expected U.S. housing data and a Dutch debt sale eased global growth concerns, though central bank intervention limited the Brazilian real's gains. Investors breathed a sigh of relief after the Dutch state raised 2 billion euros at a bond auction the day after the prime minister's resignation over budget cuts raised the specter of an expanded European debt crisis. In the United States, government data showed new single-family home sales dropped in March but still beat analysts' expectations. A private report showed U.S. single-family home prices rose in February for the first time in 10 months. "All of this is supporting U.S. stocks and Latin American currencies are following that," said Pedro Tuesta, an economist with Washington-based 4Cast. Signs of recovery in the world's largest economy and in Europe support assets perceived as risky, such as stocks and emerging market currencies. The Mexican peso gained 0.15 percent to 13.1573 to the U.S. dollar, though it traded in and out of positive territory. Brazil's real strengthened 0.04 percent to close bidding 1.8808 per dollar. The currency had strengthened as much as 0.3 percent but lost most of its gains shortly after the central bank called an auction to buy dollars. The real has been the worst performer of the world's 36 most-traded currencies tracked by Thomson Reuters this month as investors bet the government and central bank will continue to try to weaken it through taxes and market intervention. Looking ahead, analysts said the Mexican peso would continue to be volatile ahead of Mexican and U.S. central bank meetings. The Federal reserve is expected to reiterate its intent to keep U.S. interest rates near zero through 2014 when its two-day meeting concludes on Wednesday. Economists surveyed by Reuters meanwhile see the Banco de Mexico holding the benchmark interest rate at 4.5 percent on Friday although with an increased probability of a cut. Lower borrowing costs mean lower returns for investors. "There are factors that will keep the peso volatile ... We have the Fed's meeting, and a rate cut for the local reference rate hasn't been ruled out," said Gabriel Lozano, senior economist at Santander Financial Group in Mexico City. Further South, Chile's peso strengthened 0.16 percent to close bidding 487.6 per dollar while Peru's sol gained 0.04 percent to end bidding 2.65 per dollar, its strongest close in some 15 years. The Andean country's central bank has bought dollars on the spot market nearly every day in recent weeks, though not on Tuesday, amid heavy dollar inflows and strong economic growth. Link this Share this Digg this Email Reprints

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