* Dollar outflows push real to weakest level since Jan. 25 * Other Latam currencies little changed in thin, pre-holiday trade * Brazil real drops 0.5 pct, Mexico peso dips 0.1 pct By Natália Cacioli SAO PAULO, March 28 The Brazilian real ended at an over 2-month low on Thursday as dollars continued to flow out of the country, raising the prospect of another central bank intervention next week. Other Latin American currencies were little changed, however, as trading volumes declined before a long Easter weekend. The Mexican peso was practically unchanged at 12.3555 per dollar, while the Chilean peso edged up 0.1 percent. The real lost half a percentage point to close at 2.02 per dollar, its weakest level since January 25. Unlike in other Latin American markets, trading volume was high in Brazil as investors tried to influence the month-end close of the Ptax - an average exchange rate calculated by the central bank that is reference for a broad range of contracts, including foreign loans, trade, and derivatives. Before the Ptax fix, traders said banks that were long dollars were pushing the real lower to get a more favorable exchange rate in their contracts. But the real added to losses even after the central bank announced the closing Ptax rate, with traders citing continued dollar outflows from the country. "Foreigners are long dollars because of global economic issues. Brazil is not that attractive anymore and that is keeping dollars out of the country," said Caio Sasaki, an analyst with XP Investimentos in Sao Paulo. The rise in the real defied the notion that policymakers had imposed an informal trading band of 1.95-2.0 reais per dollar in Brazil. Analysts believed the central bank wanted the currency to remain within that range, which is slightly stronger than it was at the end of 2012, to avoid inflation pass-through. Still, some analysts believe the central bank may still intervene in the market next week to stem currency losses - just like it did on Wednesday by auctioning traditional currency swaps, derivative contracts that emulate the sale of dollars in the futures market. BRAZIL INTEREST RATES RISE Brazil's interest rate futures rose late on Thursday after a central bank director sounded more hawkish when making comments about the bank's quarterly inflation report, released early on the day. Carlos Hamilton Araujo, the central bank's director of economic policy, said policymakers may need to take more actions to control prices as high inflation persists. He paraphrased a famous quote by former British Prime Minister Winston Churchill regarding democracy as the least-worst form of government, saying "interest rates is the worst form of remedy to fight inflation except all the others." His comments were seen as another attempt by the central bank to offset recent remarks by President Dilma Rousseff, who caused interest rates to fall sharply on Wednesday after saying she will not support policies that try to curb inflation by lowering economic growth. "The market realigned with Araujo's speech. He sounded more hawkish, in an attempt to offset Dilma's remarks," said Paulo Petrasse, a partner at Leme Investimentos. Interest-rate contracts maturing in January 2014, one of the most traded, rose 3 basis points to 7.77 percent. Latin American FX prices at 2055 GMT: Currencies daily % YTD % change change Latest Brazil real 2.0200 -0.54 0.99 Mexico peso 12.3555 -0.08 4.12 Chile peso 471.6000 0.13 1.51 Colombia peso holiday n/a n/a Peru sol 2.5910 -0.19 -1.54 Argentina peso 5.1200 0.00 -4.05 Argentina peso 8.3800 -0.95 -19.09
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