EMERGING MARKETS-Latam currencies gain on ECB plan

Fri Sep 7, 2012 4:19am IST

* ECB bond-buying plan supports investor appetite for Latam
FX
    * Brazil real constrained by holiday, possible cenbank
action
    * Mexican peso gains 0.6 pct, Brazil real up 0.2 pct


    By Natalia Cacioli and Anna  Irrera 
    SAO PAULO, Sept 6 (Reuters) - Latin American currencies
gained on Thursday after a much-awaited plan from the European
Central Bank to support indebted euro-zone countries and strong
U.S. economic data encouraged investors to take risk in emerging
markets.
    The Mexican peso rose 0.4 percent to 13.08 per U.S.
dollar after trading as low as 13.0222, its highest level in
four months. The Chilean peso jumped 1 percent to
475.90, its strongest in a month.
    Gains in the Brazilian real  were limited,
however, as investors avoided taking major positions before the
release of crucial U.S. payroll data on Friday, when markets
will be closed in Brazil for a national holiday.
    "There is a key indicator tomorrow in the United States and
that always pressures the currency because domestic markets
don't know how global markets will react," said Ovidio Soares, a
currency trader at Interbolsa do Brasil brokerage.
    Expectations that the U.S. payroll numbers will be strong
grew after data this morning showed U.S. private employers added
far more jobs than expected in August and new claims for
unemployment benefits fell last week to the lowest level in a
month. 
    The real edged up 0.5 percent to 2.0280 per dollar but was
constrained by expectations that the Brazilian central bank may
intervene if the currency nears the edges of the narrow range of
2.0-2.1 reais that it has been trading at since early July.
    "Investors know that Brazil's government is going to uphold
that range in order to make its (economic stimulus) measures
more effective," said Enrique Alvarez, head of research for
Latin America at IDEAglobal in New York. "That's what is holding
the real."
    Details of the ECB's new and potentially unlimited
bond-buying program boosted sentiment in global markets, driving
up Wall Street by about 2 percent. Nasdaq ended the session at
its highest since 2000, and the S&P closed at more than a
four-year high.
    Brazil's interest rate-futures were little changed, however,
after minutes of the central bank's latest monetary policy
meeting left investors wondering whether the bank had finished
its monetary easing cycle last month, or whether it will cut the
base Selic rate one more time this year by 25 basis points.
    The Selic currently stands at an all-time low of 7.5
percent, after a 50-basis-point cut by the central bank on Aug.
29.
    In the minutes of that meeting, Brazilian policymakers
expressed confidence that the economy will pick up speed in
coming months and that the pace of annual inflation would resume
 a downward trajectory after a temporary spike in food prices.
 
    "I think the market didn't change its perception much" about
the future of the Selic, said Silvio Campos Neto, an economist
with Tendencias consultancy in Sao Paulo. "The minutes left the
decision on another Selic cut hinging on upcoming economic
data." 
    Interest-rate contracts maturing in January 2013 
rose only 1 basis point to 7.28 percent while those maturing in
January 2014 traded at 7.79 percent, stable from Wednesday's
close. 
            
    Latin American FX prices at 2220 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.0280     0.52    -7.86
                                             
 Mexico peso               13.0821     0.35     6.78
 Argentina peso*            6.3200     0.47   -25.16
                                             
 Chile peso               475.9000     1.03     9.12
                                             
 Colombian peso         1,803.6500     0.30     7.47
                                             
 Peru sol                   2.6080     0.12     3.41
                                             
 * Argentine peso's rate between                    
 brokerages