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EMERGING MARKETS-Latam currencies down on Fed uncertainty, Cenbank doubts
August 27, 2013 / 12:27 AM / 4 years ago

EMERGING MARKETS-Latam currencies down on Fed uncertainty, Cenbank doubts

MEXICO CITY, Aug 26 (Reuters) - Doubts about the Brazilian
central bank's ability to prop up the real hammered the
currency, while continued uncertainty on the time-frame of an
expected wind-down of U.S. Federal Reserve stimulus dragged on
the region.
    Brazil's real , down more than 14 percent this
year, fell more than 1 percent on Monday, days after the central
bank unveiled a program to provide $60 billion in cash and
currency hedges to the foreign exchange market by the year-end.
    The program, announced late on Thursday, helped the currency
strengthen more than 3 percent on Friday, its biggest one-day
gain since September 2011.
    By Monday, traders, already concerned about the imminent
withdrawal of Fed stimulus, were losing confidence that the plan
could stem the real's slide. 
    "The 'taper on' trade is driving price action in Latam fx,"
said Katia Diaz, a strategist for 4Cast consultancy. "Central
Bank intervention in Brazil is adding to this sentiment, or ...
driving high-yield regional currencies even lower."
    For years, bond buying by the Fed has provided a steady
source of dollars seeking higher returns in emerging markets.
    Fears that the Fed would soon start cutting back on bond
purchases have roiled most emerging market currencies, but the
Brazilian real has fallen more sharply than others because
investors were also worried about the country's economic
outlook.
    Brazil's real closed at 2.3831 per dollar, while    
Mexico's peso edged up 0.12 pct to 13.193 per
greenback. 
    Diaz said protests by Mexican teachers against President
Pena Nieto's education reform, part of his ambitious agenda to
boost growth, raising the spectre of more hurdles to passing his
proposals and dampening investor appetite. 

    Latin American FX prices at 0008 GMT:
    
 Currencies                      daily %   YTD %
                                  change  change
                                          
                       Latest             
 Brazil real           2.3831      -1.10  -14.25
                                          
 Mexico peso           13.193       0.12   -2.49
                                          
 Chile peso           512.500      -0.47   -6.60
                            0             
 Colombia peso        1925.60      -0.46   -8.29
                           00             
 Peru sol              2.8100       0.04   -9.22
                                          
 Argentina peso        5.6300      -0.09  -12.74
 (interbank)                              
                                          
 Argentina peso        9.2400      -0.54  -26.62
 (parallel)                               
                                          
 
 (Reporting by Walter Brandimarte; Writing by Alexandra Alper;
editing by Christopher Wilson)

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