EMERGING MARKETS-Brazil real, Mexico peso hit 2008 highs

* Brazil resigned to more currency gains – for now

* U.S. jobs data supports bids for region’s currencies

* Brazil real firms 0.67 pct, Mexico peso up 0.41 pct

MEXICO CITY, April 1 (Reuters) – Brazil’s real and Mexico’s
peso hit their strongest levels in more than 2 years on Friday,
helped by a good U.S. jobs report as well as Brazil’s apparent
resignation to further currency gains.

Brazilian officials told Reuters they were unwilling to
impose — at least for now — more severe capital controls to
weaken one of the world’s most overvalued currencies.

The real surged this week as investors tested the resolve
of authorities to contain currency strength that is hurting
local manufacturers.

Brazilian authorities have been trying to block unwanted
flows attracted to the country’s double-digit interest rates,
but investors continue to find ways around each new barrier.

The currency blew past the 1.65 per dollar level that was
considered authorities unofficial limit, and now the market is
trying to find out where the next line in the sand will be

“It seems to us that there’s building market consensus that
the Brazilian government might allow the latest gains to stick
in order to reap some cooling benefits on the inflation front,”
wrote Enrique Alvarez, head of Latin American research at
IDEAglobal in New York.

The real (BRBY: Quote, Profile, Research) bid 0.67 percent firmer at 1.618 per dollar
on the local spot market, trading around its strongest levels
since August 2008.

Further backing the real, data showed Brazilian industrial
output rose in a surprisingly strong jump in February,
prompting markets to raise expectations of central bank
interest rate hikes despite the bank signaling its preference
for other measures to temper inflation. [ID:nN01126425]

Supporting demand for riskier emerging market assets, U.S.
employment recorded a second straight month of solid gains in
March. [ID:nNOAT00477]

The gains were seen as solid enough to keep up confidence
in the U.S. recovery, but not strong enough to discourage the
Federal Reserve from its ultra-easy monetary policies that has
boosted the appeal of higher yielding Latin American debt.

Mexico’s peso (MXN=: Quote, Profile, Research) gained 0.41 percent to 11.84 per
dollar. The currency touched its strongest level since October

The currency has benefited from signs of an improving
economic recovery in the United States, its top trading
partner, as well as expectations that Mexican authorities will
not increase their current pace of building dollar reserves.

Chile’s peso hit a three-week high, boosted by market
expectations of another 50 basis-point interest rate increase
in April following publication of central bank minutes from the
March rate-setting meeting. [ID:nN01110945]

Weaker prices for copper, the Chile’s top export, weighed
down on early gains. The peso (CLP=CL: Quote, Profile, Research) bid 0.1 percent stronger
at 477 per dollar.
(Reporting by Michael O’Boyle in Mexico City, Silvio Cascione
in Sao Paulo and Brad Haynes in Santiago)

EMERGING MARKETS-Brazil real, Mexico peso hit 2008 highs