Reuters: US Dollar Report: EMERGING MARKETS-Mexican peso hits 20-mth high on inflation; real up

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EMERGING MARKETS-Mexican peso hits 20-mth high on inflation; real up Apr 9th 2013, 21:45 Tweet Share this Email Print Tue Apr 9, 2013 5:45pm EDT * Mexico 12-month inflation climbs above c.bank target ceiling * Expectation of dollar inflows support Brazilian real * Mexico peso gains 0.3 pct, Brazil real edges up 0.1 pct By Walter Brandimarte SAO PAULO, April 9 (Reuters) - The Mexican peso hit a 20-month high on Tuesday after higher-than-expected inflation made it more difficult for the central bank to cut interest rates, while the Brazilian real edged up as analysts expected dollar inflows to pick up soon. Growing global appetite for risk supported Latin American currencies in general, but the Chilean peso ended flat as investors feared a possible central bank intervention to stem further currency gains. The Mexican peso rose 0.3 percent to 12.1540 per dollar after data showed consumer prices rose faster than expected in March. The country's 12-month inflation rate hit 4.25 percent, above the central bank's target ceiling of 4 percent for the first time since November. The inflation surprise was seen by analysts as crimping the central bank's ability to further cut its base interest rate, a move that could reduce the allure of peso-denominated assets. "In our view, inflation with a floor at 3.6 percent and inflation expectations on the rise will not provide room for cutting rates," Carlos Capistran, Latin America economist with Bank of America Merrill Lynch, wrote in a research note. "However, given tight monetary conditions on strong Mexican peso, we believe the central bank could adopt an easing bias during the summer as inflation gets closer to its floor of 3.6 percent in 2013," he added. In Brazil, the real edged 0.1 percent higher as investors anticipated higher dollar inflows in the next few weeks resulting from a pick up in foreign debt sales by Brazilian companies and higher agricultural exports. "We can tell they are trying to sell longer-dated bonds abroad at higher prices," said Reginaldo Galhardo, a manager at the currency desk of Treviso brokerage in Sao Paulo. Brazilian steelmaker Gerdau on Monday sold $750 million in 10-year bonds, while sources said BTG Investments, a unit of BTG Pactual bank, is planning to sell five-year bonds. Global appetite for risk was on the rise after a report showing benign Chinese inflation raised hopes for a more accommodative monetary policy from China that boosted commodities prices. Latin American FX prices at 2130 GMT: Currencies daily % YTD % change change Latest Brazil real 1.9840 0.10 2.82 Mexico peso 12.1540 0.26 5.84 Chile peso 466.9000 0.00 2.53 Colombia peso 1816.1500 0.02 -2.76 Peru sol 2.5770 -0.04 -1.01 Argentina peso 5.1350 0.00 -4.33 Argentina peso 8.3400 -0.12 -18.71 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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