Reuters: US Dollar Report: EMERGING MARKETS-Brazil real rebounds on export finance rules

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EMERGING MARKETS-Brazil real rebounds on export finance rules Jun 28th 2012, 23:07 Thu Jun 28, 2012 7:07pm EDT * Brazil cenbank cut 2012 GDP growth estimate to 2.5 pct * Brazil real up 0.07 pct, Mexico peso down 0.29 pct By Danielle Fonseca SAO PAULO, June 28 (Reuters) - Brazil's real shook off losses o n T hursday after the central bank relaxed limits on export financing, while yields on the country's interest rate futures fell after the central bank cut its 2012 growth outlook. Concerns over the future of the euro zone weighed on Latin American currencies in general early in the session, but the Mexican peso cut losses as stocks in the United States pulled back from their lows. Brazil's real reversed sharp losses to close up a slight 0.07 percent at 2.0757 per dollar after the central bank said it would loosen previous limits on trade financing in its latest bid to prop up the currency after a sharp slump. "This inflow of funds should relieve the market and that's what brought the main impact on the exchange," said Reginald Gallardo, the manager of foreign exchange brokerage Treviso. Brazil's currency was on a winning streak against the dollar in 2010 and 2011, fueled by demand for its high-yielding assets. The gains hurt local industry and pushed authorities to try to weaken the currency. However, a near-10 percent slump in the real this year now has authorities unwinding some of its previous measures to try and to curb the real's losses, which could push up inflation by making imports more expensive. Europe's debt troubles have weighed across riskier assets, including Latin American currencies, and the real has also been hurt by slowing growth in Brazil, the region's top economy. The central bank has stepped up efforts to boost the real since it slumped to a three-year low just past 2.10 per dollar in May. The bank's measure on export financing came after the currency threatened to break the 2.10 level in the last two sessions. In a further move to back the real, the central bank said on T hursday it would offer up to 60,000 currency swaps in an auction on Friday, which would effectively increase the supply of dollars in the market. Brazil's interest-rate futures fell after the central bank cut its economic growth forecast for this year to a meager 2.5 percent, signaling it may keep pushing the limits of monetary policy to boost the economy. EURO-ZONE Doubts persisted that a summit of European leaders that began o n T hursday will make progress in resolving the region's deepening debt crisis, sapping investor appetite for emerging market assets in general. But Mexico's peso cut sharp losses to close down 0.29 percent at 13.61 per dollar as traders squared positions in case of a surprise positive development in Europe. "Markets play with the optimism that something could happen, even though everyone knows that is not very likely," said Gabriel Lozano and economist at Santander in Mexico City. Chile's peso lost 0.51 percent to 509.30 per dollar. The local market closed before the Mexican peso and U.S. stocks cut their losses. Link this Share this Digg this Email Reprints

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