Reuters: US Dollar Report: EMERGING MARKETS-Latam FX gains for 3rd day on stimulus hopes

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EMERGING MARKETS-Latam FX gains for 3rd day on stimulus hopes Jul 27th 2012, 15:42 Tweet Share this Email Print Fri Jul 27, 2012 11:42am EDT * Euro zone policymakers seen acting to support Spain, Italy * Fed also expected to deploy additional stimulus * Mexico peso jumps 1 pct, Chilean peso at 2-1/2 month high * Brazil real stuck in narrow trading range By Walter Brandimarte RIO DE JANEIRO, July 27 (Reuters) - Latin American currencies gained for the third straight session on Friday on hopes for additional economic stimulus on both sides of the Atlantic that could result in strong foreign-currency flows into emerging markets. The Mexican peso led gains in the region, rallying 1 percent after German Chancellor Angela Merkel and French President Francois Hollande pledged to do all in their power to protect the euro. Their joint statement added to expectations that European policymakers are ready to act. Earlier, French newspaper Le Monde reported euro-zone governments and the European Central Bank are preparing to intervene in financial markets to help bring down Spanish and Italian borrowing costs. "Markets are waiting for the ECB next week, especially after Draghi yesterday," said Jankiel Santos, chief economist at BES Investimento in Sao Paulo, referring to remarks by the ECB chief Mario Draghi, who said on Thursday that the bank would do "whatever it takes" to preserve the euro. Bets that the U.S. Federal Reserve would deploy additional stimulus measures were also on the rise after data showed the U.S. economy slowed in the second quarter as consumers spent at their slowest pace in a year. The Chilean peso rose 0.4 percent to 483.70 per dollar, its strongest level in more than 2-1/2 months, also benefiting from an over 1 percent rise in the price of copper , the country's main export product. "The peso pierced the level of 485.00 per dollar, which now became a floor for the currency in the short term," said Sergio Tricio, head of research at Forex Chile. The Brazilian real gained a more modest 0.2 percent to 2.0169 per dollar, however, as investors feared the central bank could intervene in the market if the currency strengthens too much. The real has been stuck in a narrow range between 2.0 and 2.05 reais in the past several weeks, in what traders call an informal trading band imposed by the central bank. Latin American FX prices at 1520 GMT: Currencies daily % YTD % change change Latest Brazil real 2.0169 0.25 -7.36 Mexico peso 13.2799 0.99 5.19 Argentina peso* 6.3800 0.63 -25.86 Chile peso 483.7000 0.41 7.36 Colombia peso 1,791.2500 0.04 8.21 Peru sol 2.6240 0.50 2.78 * 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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