Reuters: US Dollar Report: EMERGING MARKETS-Mexico peso hits 7-week low, Brazil real dips

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EMERGING MARKETS-Mexico peso hits 7-week low, Brazil real dips Feb 25th 2013, 23:58 Tweet Share this Email Print Related Topics Currencies » Bonds News » Bonds » Markets » Mon Feb 25, 2013 6:58pm EST * Brazil yields see volatile trade on central banker comments * Brazil real dips 0.33 pct, Mexico peso sheds 0.69 pct MEXICO CITY, Feb 26 (Reuters) - Mexico's peso slumped to a seven-week low on Monday and Brazil's real weakened after elections in Italy revived concerns about Europe's debt crisis, hitting higher-risk assets around the world. A huge protest vote by Italian voters enraged by economic hardship pushed the country toward a congressional deadlock after voting projections showed no coalition was strong enough to form a government. "This has put in doubt the structural reforms needed by Italy's economy," said Gabriela Siller, an economist at Mexican brokerage BASE. "Increased risk aversion by investors fed into higher demand for safe-haven assets." Since late 2009, global markets have been repeatedly spooked by concerns that Europe's debt troubles could spark another global financial crisis. The Mexican peso shed 0.69 percent to end at 12.7980 per U.S. dollar while the Brazilian real bid 0.33 percent weaker at 1.9765 per greenback. Yields on Brazilian interest rate futures saw volatile trade as investors eye the chance that policymakers could raise the country's benchmark rate next week from a record low of 7.25 percent to head off rising inflation. The market has priced in slightly more than even odds that the central bank will hold interest rates steady on March 6, with a less than a 50 percent chance for a 25 basis point hike. Central Bank President Alexandre Tombini said in a Sunday interview with The Wall Street Journal that inflation has been more resilient than policymakers would like it to be. Tombini reiterated that the central bank sets monetary policy based upon inflation, not economic growth targets, in comments that sounded like an effort to allay market concerns that the bank could tolerate higher inflation rates to help foster growth in Brazil. Brazil's central bank last year cut its benchmark rate to a record low to help support a flagging economy, but inflation has been rising even as growth remains sluggish. In a presentation to investors in New York later on Monday, traders said Tombini did not sound like he was about to raise interest rates. Many analysts believe that the central bank will first alter the language it used in the minutes of its previous monetary policy meeting, when it promised to keep rates unchanged for a "prolonged period," before actually hiking the Selic. Latin American FX prices at 2330 GMT: Currencies Daily YTD pct pct change Latest change Brazil real 1.9765 -0.33 3.21 Mexico peso 12.7980 -0.69 0.52 Chile peso 472.9000 0.11 1.23 Colombia peso 1813.0000 -0.78 -2.59 Peru sol 2.5830 -0.08 -1.24 Argentina peso 5.0325 -0.05 -2.38 Argentina peso 7.7600 0.52 -12.63 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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