Reuters: US Dollar Report: EMERGING MARKETS-Latam currencies gain on China rate cut

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EMERGING MARKETS-Latam currencies gain on China rate cut Jun 7th 2012, 15:51 Tweet Share this Email Print Thu Jun 7, 2012 11:51am EDT * Many analysts had expected China to hold rates this year * Mexico, Chilean pesos strengthen 0.8 percent * Peru central bank expected to hold key rate later * Brazil markets closed for holiday, reopen Friday By Caroline Stauffer LIMA, June 7 (Reuters) - Latin American currencies strengthened on Thursday after China's central bank cut interest rates, though gains moderated after Federal Reserve chairman Ben Bernanke gave few hints of monetary stimulus in the world's No. 1 economy. Mexico's peso gained 0.8 percent to 13.926 per dollar while Chile's peso strengthened 0.82 percent to bid 502.3 per dollar after its strongest close in two weeks on Wednesday. Brazil's spot market was closed for a holiday. Bernanke told a Congressional committee the Fed was monitoring "significant risks" to the U.S. recovery but gave no signals of a third round of bond buying to spur growth, curbing investor enthusiasm slightly. "The cut in China is dominating, I think Bernanke was just a reminder that we have to be a bit cautious," said Alfredo Puig, a trader at Mexico's Vector brokerage. Many analysts thought China would keep rates on hold this year. The 25-basis-point cut brings the official one-year borrowing rate to 6.31 percent and the one-year deposit rate to 3.25 percent. Investors hope the move, and potential cuts in the future, will spur growth in the world's No. 2 economy, keeping Chinese appetite for metals and other commodities exported by Latin American countries intact. "We can safely say that more easing will be seen ahead," said a report on China from Brown Brothers Harriman brokerage. Investors had hoped other central banks would follow China's move and take action to spur growth, until Bernanke dampened enthusiasm. So-called quantitative easing, or the purchases of U.S. treasury bonds by the Fed, has provided markets with additional funds to invest in assets considered risky, like Latin American currencies, in past years. Peru's sol currency bid 0.44 percent stronger at 2.673 per dollar. The country's central bank is expected to keep rates on hold for the 13th straight month after local markets close today. Latin America FX prices from Reuters at 15:17 GMT: Currencies daily yearly pct pct Latest change change Mexico peso 13.926 0.796 0.23 Chile peso 502.3000 0.82 3.38 Colombia peso 1,768.9 0.7 9.53 Peru sol 2.673 0.44 0.81 Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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