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 27th 2012, 01:24 Tweet Share this Email Print Mon Nov 26, 2012 8:24pm EST * Latam currencies weighed down by fears over Greece * Brazil real's losses curbed by intervention concerns * Mexican peso down 0.32 pct, Brazilian real flat By Natalia Cacioli and Jean Arce SAO PAULO/MEXICO CITY, Nov 26 (Reuters) - Latin American currencies edged lower on Monday on uncertainty over Greek aid negotiations, which resulted in a debt-cutting agreement reached too late in the day to boost the region's foreign exchange markets. The Chilean peso lost 0.6 percent while the Mexican peso fell 0.32 percent on the Greek uncertainty. The Brazilian real was mostly flat amid expectations that the central bank could again intervene in the market if the currency weakens toward the level of 2.1 per dollar. But most investors were eyeing Brussels, where euro zone finance ministers and the International Monetary Fund finally clinched an agreement on a new debt target for Greece, a significant step toward releasing another tranche of loans to the near-bankrupt economy. 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. But U.S. President Barack Obama's rejection on Monday of a Republican suggestion for avoiding the "fiscal cliff" has some analysts far from sanguine on the peso's near-term prospects. "We remain pretty neutral on the (Mexican) peso ... but we still think there is room for disappointment in terms of peso volatility," said Delia Paredes, a strategist at Banorte-IXE in Mexico, citing "signs of disagreement in the U.S." She expects the Mexican peso to trade between 12.87 and 13.10 per dollar this week. The White House on Monday threw cold water on a Republican proposal for solving the so-called "fiscal cliff" by limiting tax deductions and loopholes, instead of allowing taxes to rise for the highest earners in the United States. REAL'S NEW TRADING BAND? The Brazilian real closed nearly flat, weakening only 0.03 percent to 2.0818 per greenback 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 12:53 AM GMT: Currencies daily % YTD % change change Latest Brazil real 2.0818 -0.03 -10.25 Mexico peso 13.0215 -0.32 7.280 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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