Reuters: US Dollar Report: EMERGING MARKETS-Brazil real flat ahead of cenbank minutes, peso rally flags

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EMERGING MARKETS-Brazil real flat ahead of cenbank minutes, peso rally flags Jul 18th 2012, 22:02 Tweet Share this Email Print Wed Jul 18, 2012 6:02pm EDT By Rachel Uranga and Walter Brandimarte MEXICO CITY/RIO DE JANEIRO, July 18 (Reuters) - Brazil's real t raded flat as investors m oved to the sidelines ahead of ce ntral bank minutes t hat c ould back expectations of further interest rate cuts, while the Mexican peso los t steam af ter a three-day rally. The Brazilian real traded 0.03 percent off a head of the T hursday release of minutes of the central bank's latest monetary policy meeting. In vestors are looking fo r more clarity on interest-rate strategy this year. The Mexican peso lost 0.0 7 percent . The currency had rallied early in the session after comments from Federal Reserve Chairman Be n Bernanke, w ho re peated in congressional testimony Tue sday and Wed nesday the bank could take additional action if it f inds job creation lag ging too much. "Bernanke offered a repeat statement as to the Fed's willingness to act if faced with a greater economic slowdown, but refrained specifically from offering any additional signs of quantitative easing," said Enrique Alvarez, head of strategy of IDEAglobal in New York. But the currency lost momentum near the close, as investors focused on the glum global outlook. REAL STUCK IN NARROW RANGE The Brazilian real was flat as investors had little incentive to take the currency out of the narrow range it has traded in for the past two weeks under the threat of central bank intervention. "The currency market is stuck within this range of 2.00-2.10 and investors have no reason to trade here, as you can't make any money like that," said Jankiel Santos, chief economist at BES Investimento in Sao Paulo. In the past few weeks, the Brazilian central bank has intervened heavily whenever the real weakens to near 2.1 per dollar. On the other hand, it has also said that a currency stronger than 2 per greenback would hurt exporters. Uncertainty on whether the Brazilian central bank would resort to even lower interest rates and a weaker currency to support the economy this year has also kept investors cautious. Brazil last week cut its base Selic rate to an all-time low of 8 percent, and minutes of the bank's latest meeting are expected to shed light on how much lower rates may go this year. PESO RALLY Mexico's peso has strengthened about 8 percent since June with investors increasingly optimistic about t he growth outlook of La tin America's second largest economy. "We are in an upward tendency," said Jose Curiel, a trader at Intercam in Mexico City. " If we break through 13.10, a key su p port level, we could easily go to 13 per dollar an important psychological level." Earlier in the week, the International Monetary Fund projected Mexico would grow about 3.9 percent in 2012 compared to 2. 7 percent for Br azil, Latin America's la r gest economy. The IMF also saw a slowdown in China, a top trading partner of Brazil. Analyst say Mexico's upbeat economic outlook in the context of slow global growth could further support the peso which rallied in the run-up to July 1 presidential elections on hope the new president will pass reforms that will further bolster growth. "This is helping benefit all Mexican assets," said Ramon Cordova, a trader at Banco BASE in Monterrey. Yields on Mexican 10-year bond hit a record low during the last session at 4.99 percent. Mexico's finance ministry said on Wednesday it logged the biggest b ond s ale yet b y a s yndicate of banks since it began the practice in July 2010. The ministry sold 30 billion Mexican pesos ($2.29 billion) in five-year bonds. Latin American FX prices from Reuters at 2243 GMT: Currencies daily % year-to change date % Latest change Brazil real 2.0209 -0.03 -7.61 Mexico peso 13.1647 -0.07 6.11 Argentina peso* 6.7000 -1.49 -29.40 Chile peso 487.6000 0.45 6.50 Peru sol 2.6210 -0.04 2.90 * Argentine peso's rate between brokerages 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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