Reuters: US Dollar Report: EMERGING MARKETS-Latam currencies weaken on Greece anxiety

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EMERGING MARKETS-Latam currencies weaken on Greece anxiety Nov 26th 2012, 17:07 Tweet Share this Email Print Mon Nov 26, 2012 12:07pm EST * Investors cautiously await outcome of Greek aid talks * Brazil real's losses curbed by intervention concerns * Mexican peso down 0.2 pct, Brazilian real 0.15 pct lower By Natalia Cacioli and Michael O'Boyle SAO PAULO/MEXICO CITY, Nov 26 (Reuters) - Latin American currencies edged lower on Monday as investors cautiously awaited the outcome of Greek aid negotiations, the success of which the market saw as essential to avoiding an escalation of the euro zone debt crisis. Losses in the Brazilian real were contained, however, by expectations that the central bank could again intervene in the market if the currency weakens toward the level of 2.1 per dollar. The Chilean peso lost 0.6 percent while the Mexican peso fell 0.2 percent on the Greek uncertainty. Investor focus was on Brussels, where euro zone finance ministers and the International Monetary Fund tried for the third time in as many weeks to agree on emergency aid for Greece. Mexico's peso has firmed more than 2 percent from a 2-1/2 month low hit earlier this month, supported by easing concerns about fiscal negotiations in the U.S. Congress and appetite for the country's higher-yielding debt. Data on Monday showed Mexican manufactured exports rebounded in October after a recent slump, underscoring solid demand in the United States, Mexico's top trading partner. The central bank said on Friday that total portfolio investment in Mexico by foreigners reached $24 billion in the third quarter, boosted by a record flow of foreign investment into peso-denominated debt. "Holdings (of peso debt by foreigners) will keep rising, and as a consequence, the peso will keep gaining," Gabriela Siller, an economist at Mexican brokerage BASE wrote in a note. REAL'S NEW TRADING BAND? The Brazilian real weakened 0.15 percent to 2.0843 per dollar as investors digested conflicting signs from policymakers about the future of the country's foreign exchange policy. The real on Friday posted its largest single-day gain in nearly three months after the central bank stepped into the market to halt losses that were partly fueled by comments from Finance Minister Guido Mantega. Speaking to business leaders in Sao Paulo, Mantega said Brazil's exchange rate was at a "reasonable though not totally satisfactory level" to support industry. His remarks drove the real as low as 2.1168 per dollar, its weakest level in 3-1/2 years. The apparent tug of war between the central bank and Mantega left investors wondering whether policymakers still uphold an informal trading band of 2.0-2.1 per dollar, where the real has been stuck since early July. "I believe the market is still digesting that intervention," said Luiz Fernando Genova, a trader with Banco Daycoval in Sao Paulo. "We have seen the real weakening lately, but it's still too early to say they will change this band." Latin America FX prices at 2045 GMT: Currencies daily % YTD % change change Latest Brazil real 2.0843 -0.15 -10.35 Mexico peso 13.0035 -0.18 7.43 Argentina peso* 6.4400 -0.47 -26.55 Chile peso 481.5000 -0.60 7.85 Colombia peso 1,825.0000 -0.07 6.21 Peru sol 2.5880 0.00 4.21 * 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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