Reuters: US Dollar Report: EMERGING MARKETS-Brazil real leads Latam FX up on cenbank measure

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EMERGING MARKETS-Brazil real leads Latam FX up on cenbank measure Dec 4th 2012, 16:57 Tweet Share this Email Print Related Topics Currencies » Bonds News » Bonds » Tue Dec 4, 2012 11:57am EST * Brazil central bank eases export financing rules * Hopes of US budget deal supports risk appetite * Brazil real up 0.4 pct, Mexico peso gains 0.2 pct By Natalia Cacioli SAO PAULO, Dec 4 (Reuters) - Brazil's real lead gains among Latin American currencies after the central bank acted to ease financing for exporters, a move that will likely boost dollar inflows to the country. The currencies of Mexico and Chile were also stronger on hopes that a meeting of U.S. congressional leaders and governors with President Barack Obama would advance budget negotiations that are essential to ensure the world's largest economy will keep growing next year. The Brazilian real erased early losses and gained 0.4 percent after the central bank narrowed the scope of a hefty tax levied on exporters that receive advance payment for the goods they sell abroad, likely boosting liquidity in the foreign exchange market. Under the new rules Brazil will eliminate a 6 percent financial transaction tax (IOF) on prepayments of up to five years on exports. The decision came one day after the central bank heavily intervened in the market -- auctioning currency swaps and dollars on the spot market -- to halt a sharp depreciation of the real. "The market was going too fast in the direction of a weaker currency. Today's measure comes on the heels of yesterday's strong intervention, so it is meaningful," said Alfredo Barbutti, chief economist at BGC Liquidez, a brokerage in Sao Paulo. The series of interventions are likely an attempt by the central bank to smooth out a recent slump in the real, which lost 4.7 percent in November, still allowing the currency to gradually weaken. Members of the Brazilian government have said they want a weaker currency to help manufacturers lift exports and better compete against imports, but it is not clear how much the central bank will allow the real to slide, given inflation concerns. In Mexico, the peso rose 0.2 percent to 12.9698 per dollar., with traders saying the currency is likely to trade between 12.9 and 13.0 this session. Latin American FX prices at 16:35 GMT Currencies daily % YTD % change change Latest Brazil real 2.1108 0.39 -11.48 Mexico peso 12.9650 0.24 7.75 Argentina peso* 6.4300 0.16 -26.44 Chile peso 480.7000 0.15 8.03 Colombia peso 1,813.7500 0.09 6.87 Peru sol 2.5780 0.08 4.62 * 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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