Reuters: US Dollar Report: EMERGING MARKETS-Latam currencies slip on Spain protests

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EMERGING MARKETS-Latam currencies slip on Spain protests Sep 26th 2012, 21:17 Tweet Share this Email Print Related Topics Currencies » Bonds News » Bonds » Markets » Wed Sep 26, 2012 5:17pm EDT * Madrid mass protests increase tensions in the euro zone * Brazil real flat on central bank intervention fears * Mexican peso 0.12 pct lower; Chilean peso down 0.11 pct By Jean Arce MEXICO CITY, Sept 26 (Reuters) - Latin American currencies edged down on Wednesday as growing opposition to austerity measures in Spain added to jitters over the euro zone debt crisis, but recent stimulus measures in the United States were seen limiting losses. Protests against austerity measures erupted in Madrid, making it more difficult for Prime Minister Mariano Rajoy to request international financial aid -- a condition for Spain to receive support from the European Central Bank. Investors fear that a delay in the ECB bond-buying program would further complicate the euro-zone debt crisis, potentially dragging more economies into recession. "The Spanish government is resisting the possibility of a asking for a bailout. It is still not clear what they will ask for and that is making the market nervous," said Juan Carlos Alderete, a currency strategist at Banorte-IXE in Mexico City. The Mexican peso lost 0.12 percent to 12.8670 per dollar while the Chilean peso bid 0.11 percent weaker at 470.50 per dollar. The Brazilian real was near flat, however, in a seventh consecutive session of very low volatility. A recent bout of strong central bank intervention left investors unwilling to make big bets on the direction of the real. Despite expectations of short-term losses, traders said both the Mexican and Chilean pesos are set to gain in the medium term as U.S. stimulus measures increase dollar flows to emerging markets. The cost of dollars in local currencies could keep rising, but it would likely hit resistance around 474 Chilean pesos per dollar, while losses in the Mexican currency were seen limited to 13.05 or 13.10 per dollar, traders said. The real was little changed as investors refrained from making bigger bets in a market that remains under constant threat of central bank intervention. Brazilian policymakers have bound the real to a very narrow trading range of 2.0 to 2.1 per dollar as they vow to use all means necessary to offset capital inflows resulting from the U.S. Federal Reserve's stimulus measures. "Investors got scared with all this intervention talk," said Gustavo Godoy, manager of the treasury desk of Daycoval bank in Sao Paulo. "You have the whole world to invest your money, why bring it to a market that is subject to intervention?" Latin American FX prices at 2045 GMT: Currencies daily % year-to- change ate % Latest change Brazil real 2.0337 0.03 -8.12 Mexico peso 12.8760 -0.12 8.49 Argentina peso* 6.2700 0.80 -24.56 Chile peso 470.5000 -0.11 10.37 Colombia peso 1,797.3000 -0.02 7.85 Peru sol 2.5940 0.08 3.97 * Argentine peso's rate between brokerages Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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