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EMERGING MARKETS-Latam currencies edge up before Fed, real flat
September 13, 2012 / 4:06 PM / 5 years ago

EMERGING MARKETS-Latam currencies edge up before Fed, real flat

* Fed to announce policy decision at 1630 GMT
    * Brazil real flat on fears of central bank intervention
    * Mexico peso gains 0.2 pct, Chilean peso up 0.4 pct

    By Natalia Cacioli
    SAO PAULO, Sept 13 (Reuters) - Latin American currencies
edged up on Thursday before a widely-expected announcement of
stimulus measures by the U.S. Federal Reserve, while the
Brazilian real was little changed as investors feared a possible
central bank intervention.
    The Mexican peso gained 0.2 percent while the Chilean
peso rose 0.4 percent less than an hour before the
Fed's policy announcement, which most investors believe to
include a third round of its bond-buying program.
    By injecting money into the economy, the Fed's program is
expected to drive large dollar flows into higher-yielding
emerging market economies, further strengthening their
currencies.
    The Brazilian real  was unchanged at 2.0256 per
dollar, however, as investors bet the central bank would
intervene again to keep the currency above the level of 2 per
dollar, which the government sees as beneficial to exporters.
    "The currency moves are driven by expectations of the Fed
announcement. Most players believe the Fed will act, most likely
by launching QE3," said Luiz Henrique de Paula, manager of the
currency desk at H.Commcor brokerage in Sao Paulo.
    "On the other hand, we have a strong defense of the
2-per-dollar floor by the Brazilian central bank, which has
clearly showed it won't allow the currency to strengthen past
this level." 
    
    Latin American FX prices at 1600 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.0256     0.00    -7.76
                                             
 Mexico peso               12.9860     0.23     7.57
                                             
 Argentina peso*            6.3000     0.32   -24.92
                                             
 Chile peso               472.6000     0.44     9.88
                                             
 Colombia peso          1,801.4500    -0.02     7.60
                                             
 Peru sol                   2.6035     0.02     3.59
                                             
 * Argentine peso's rate between                    
 brokerages

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