Reuters: US Dollar Report: EMERGING MARKETS-Brazil real leads Latam currencies higher

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EMERGING MARKETS-Brazil real leads Latam currencies higher Dec 10th 2012, 21:14 Mon Dec 10, 2012 4:14pm EST * Brazil central banker says real has room to appreciate * Positive Wall Street session supports Latam currencies * Chile's peso closes at nearly 2-month high * Brazil real gains 0.7 pct, Mexico peso up 0.4 pct By Walter Brandimarte RIO DE JANEIRO, Dec 10 (Reuters) - Brazil's real gained on Monday after a central bank director said the currency still has room to appreciate, adding to expectations that the government may further intervene in the foreign exchange market. Other Latin American currencies also strengthened as a positive Wall Street session fueled investors' appetite for risk, while Venezuela's bonds rallied after ailing President Hugo Chavez named a successor, raising the prospect of his departure after 14 years in power. The Brazilian real closed 0.7 percent stronger at 2.0765 per dollar after Aldo Mendes, the central bank's director of monetary policy, said the currency was slightly weaker than the level projected by a central bank model. Mendes repeated the central bank was ready to supply dollars to the market at the end of the year, when demand for greenbacks usually grows as foreign companies send profits home to close annual accounts. The real had already opened stronger after the central bank warned late on Friday, just as the currency weakened to near 2.1 per dollar, that it was conducting a survey to gauge demand for dollars in the foreign exchange market. "That sounds to me like the central bank is defending the level of 2.10 per dollar," said a currency trader with a large Brazilian bank in Sao Paulo. The survey could lead the central bank to auction traditional currency swaps -- derivatives that emulate the sale of dollars in the foreign exchange market -- or to sell dollars directly on the spot market with repurchase agreements. None of those operations took place on Monday, but the central bank's warning was enough to support the real during the entire session and lead investors to believe the bank wants the currency to remain within the narrow trading band of 2.0-2.1 reais per dollar where it has been stuck since early July. "I still believe the central bank is upholding this trading band," said Mario Battistel, a manager at the currency desk of Fair brokerage. The Mexican peso rose 0.4 percent to 12.8975 per dollar while the Chilean peso gained 0.3 percent to 475.50 per dollar, its strongest level in nearly two months. "All the fundamentals seem to be supporting the (Chilean) peso today," said a currency trader in Santiago, citing stock gains and a rise in the price of copper, Chile's main export product. In Venezuela, news that President Hugo Chavez was returning to Cuba for more cancer surgery fueled speculation of a regime change in the oil exporting nation. Foreign investors, who believe Chavez's policies are detrimental to the country's economic prospects, responded by driving the price of Venezuelan bonds sharply higher. The bond maturing in 2027 jumped 2.25 points higher to bid 101.00 cents to the dollar, its highest level since February 2008. Latin American FX prices at 2040 GMT: Currencies daily % YTD % change change Latest Brazil real 2.0765 0.70 -10.02 Mexico peso 12.8085 0.36 9.06 Argentina peso* 6.4300 0.62 -26.44 Chile peso 475.5000 0.27 9.21 Colombia peso 1,799.1000 -0.13 7.74 Peru sol 2.5710 0.04 4.90 * Argentine peso's rate between brokerages Link this Share this Digg this Email Reprints

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