Reuters: US Dollar Report: EMERGING MARKETS-Brazil real up on cenbank measure, Mexican peso firms

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EMERGING MARKETS-Brazil real up on cenbank measure, Mexican peso firms Dec 5th 2012, 02:33 Tweet Share this Email Print Tue Dec 4, 2012 9:33pm EST * Brazil central bank eases export financing rules * Mexican consumer confidence up in Nov for second month * Brazil real up 0.17 pct, Mexico peso gains 0.36 pct By Natalia Cacioli and Jean Arce SAO PAULO, Dec 4 (Reuters) - Brazil's real edged up after the central bank acted to ease financing for exporters, a move that will likely boost dollar inflows to the country. The Mexican peso gained after data out on Tuesday showed consumer confidence in Mexico rose for the second month in a row in November, bolstering bets that the global slowdown is not weighing too heavily on Latin America's No. 2 economy. The Brazilian real erased early losses and gained 0.17 percent to close at 2.1155 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. The Mexican peso rose 0.36 percent to close at 12.9500 per dollar, after data showed an index of consumer confidence rose to 97.0 in November from 96.8 in October. The peso has gained more than 7 percent against the dollar so far this year, one of the biggest advances against the greenback among 152 currencies tracked by Reuters. But analysts said a $600 billion cocktail of tax increases and spending cuts looming over the United States - Mexico's largest trading partner - must be resolved before the peso can strengthen significantly. "Definitely, for us to see a stronger trend of appreciation in the exchange rate, we need to hear more news or get more clarity on fiscal issues from the United States," said Rafael Camarena, an economist with financial group Santander. Optimism for progress in resolving the U.S. "fiscal cliff" was dented on Tuesday after remarks by President Barack Obama, who rejected a Republican proposal to resolve the crisis as "out of balance" and said any deal must include a rise in income tax rates on the wealthiest Americans. Latin American FX prices at 02:04 GMT Currencies daily % year-to- change ate % Latest change Brazil real 2.1155 0.17 -11.68 Mexico peso 12.9500 0.36 7.87 Argentina peso* 6.4200 0.31 -26.32 Chile peso 480.7000 0.15 8.03 Colombia peso 1,812.8100 0.14 6.93 Peru sol 2.5800 0.00 4.53 * 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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