Reuters: US Dollar Report: EMERGING MARKETS-Latam currencies slide on Spain bailout fears

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EMERGING MARKETS-Latam currencies slide on Spain bailout fears Jul 23rd 2012, 16:04 Tweet Share this Email Print Mon Jul 23, 2012 12:04pm EDT * Half a dozen Spanish regions seen requesting financial aid * JP Morgan recommends selling Chilean peso * Mexico peso down 1.3 percent, Brazil real falls 0.9 percent By Walter Brandimarte and Natalia Cacioli RIO DE JANEIRO, July 23 (Reuters) - Latin American currencies fell on Monday as growing fears that Spain could lose access to credit markets drove investors into the perceived safety of the U.S. dollar. Mexico's peso, the most traded Latin American currency, slumped 1.3 percent while the Brazilian real lost 0.9 percent on fears Spain would need to be rescued by its euro zone partners, further stretching the region's finances. The Chilean peso lost 0.8 percent on a fall in the price of copper, the country's main export, and following JP Morgan's recommendation to sell the currency. "Clearly external markets are weighing on the real. The perception of risk has worsened, with Spain returning to investors' focus," said Flavio Serrano, a senior economist with BES Investimento in Sao Paulo. Worries that Madrid would be forced into an EU bailout grew after reports that the Spanish region of Murcia was on track to become the second in the country to seek financial assistance from the central government. Half a dozen regional governments in the country were ready to do the same, according to Spanish media. Yields paid on Spain's 10-year bonds soared to more than 7.5 percent, raising questions about the country's ability to refinance its debt obligations in capital markets. As investors' aversion to risk grew, the Mexican peso weakened to 13.5346 per U.S. dollar, its weakest in three weeks and sharply above its 100-day and 200-day simple moving averages. The Brazilian real weakened to as much as 2.0448 per dollar, a level not seen since July 12. The Chilean peso fell to 493.00 per dollar in its second consecutive session of losses, after closing at a more than two-month high of 485.40 on Thursday. Its recent gains led JP Morgan to recommend investors to sell the currency, targeting a price of 500 per dollar. "The outperformance of the Chilean economy seems largely priced in the peso," JP Morgan analyst Carlos Carranza wrote in a note to clients. He said the bank has recently cut its forecast for copper prices, which should limit the upside for the Chilean peso. Latin American FX prices at 1540 GMT: Currencies daily % YTD % change change Latest Brazil real 2.0414 -0.91 -8.47 Mexico peso 13.5346 -1.25 3.21 Argentina peso* 6.3900 0.94 -25.98 Chile peso 493.0000 -0.81 5.33 Colombia peso 1,791.2000 -0.60 8.22 Peru sol 2.6390 0.00 2.20 * 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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