Reuters: US Dollar Report: UPDATE 1-S. American central banks monitoring impact stimulus may have on currencies

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UPDATE 1-S. American central banks monitoring impact stimulus may have on currencies Apr 12th 2013, 22:48 Fri Apr 12, 2013 6:48pm EDT * Economic performance in 2013 to surpass 2012 -c.bankers * Japan stimulus brings risks for South America * Region's cenbanks concerned about FX, financial stability RIO DE JANEIRO, April 12 (Reuters) - Several South American central banks said on Friday that they are paying "special attention" to rising global liquidity resulting from easy-money policies in developed countries amid concerns it could cause unwanted currency appreciation in emerging economies. In a statement issued after a meeting in Rio de Janeiro, representatives of 10 central banks also agreed that South American economies will perform better in 2013 than in 2012 despite an expected prolonged period of low global growth. Concerns about the effects of global liquidity on developing economies have been on the rise since Japan unveiled an unprecedented $1.4 trillion monetary policy stimulus earlier this month. Part of that money, analysts say, is likely to find its way into higher-yielding emerging economies, causing an unwanted currency appreciation that could hurt local industries. Interest rates in Japan are close to zero, while the benchmark rate is 7.25 percent in Brazil, 5 percent in Chile and 4 percent in Mexico. Overall, the monetary stimulus by developed countries has been successful in avoiding a global recession, but it has also brought volatile capital flows to emerging economies, said Luiz Awazu, head of international affairs at Brazil's central bank. "As recipients of those inflows, we need to know how to manage them so they will benefit us rather than destabilizing our credit and financial conditions," Awazu told reporters. Attending the meeting were the heads of the central banks of Brazil, Chile, Colombia, Peru, Argentina, Ecuador, Paraguay and Uruguay, as well as representatives for the central banks of Venezuela and Bolivia. Link this Share this Digg this Email Reprints

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