EMERGING MARKETS-Latam currencies gain on US stimulus bets

by on July 25, 2012 4:17 pm BST

Wed Jul 25, 2012 12:17pm EDT

By Natalia Cacioli
    SAO PAULO, July 25 (Reuters) - Key Latin American currencies
edged higher on Wednesday, halting a three-day slide, as
investors speculated the U.S. Federal Reserve may soon deploy
additional monetary stimulus, which  would boost the flow of
dollars into emerging economies.
    Gains seemed fragile, however, as economic concerns and
disappointing corporate earnings weighed on global equity
markets, dampening investor sentiment in general.
    The Brazilian real  rose 0.2 percent, trimming
some initial gains as major Wall Street indexes turned negative
on disappointing results from Apple Inc.
    The Mexican peso gained 0.3 percent, while the
Chilean peso was 0.5 percent stronger.
    "Expectations that the Fed may move up its third round of
stimulus to August encouraged investors," said Luciano Rostagno,
chief strategist at WestLB bank in Sao Paulo.
    Also supporting Latin American currencies was a report
showing that a European Central Bank policymaker opened up to
the idea of giving Europe's new permanent rescue fund a banking
license, which would enable it to borrow unlimited central bank
money and boost its capacity to fight the crisis.
    The currencies of Brazil, Mexico and Chile had posted losses
in the past three sessions as tensions in the euro zone rose and
investors speculated Spain could need a full bailout that would
further stretch the euro zone's finances. 

    Latin American FX prices at 1600 GMT:
 Currencies                            daily %     YTD %
                                        change    change
 Brazil real                  2.0384      0.24     -8.33
 Mexico peso                 13.6670      0.29      2.21
 Argentina peso*              6.4200      0.16    -26.32
 Chile peso                 492.3000      0.49      5.48
 Colombia peso            1,803.0000      0.01      7.51
 Peru sol                     2.6380      0.11      2.24