EMERGING MARKETS-Chile’s peso firms on copper; region weaker

* U.S. personal income data weighs on region

* Mexican peso loses 1 pct, hitting 8-week low

* Mexican drug violence starts to worry investors

By Samantha Pearson

SAO PAULO, Aug 30 (BestGrowthStock) – The Chilean peso hit its
strongest level in seven months on Monday, outperforming the
region’s major currencies, as the price of copper, Chile’s main
export, rallied.

Data showing the country rapidly recovering from a
devastating earthquake this year also helped the peso to firm
while the rest of Latin America’s major currencies weakened.

Industrial output in Chile jumped 3.3 percent in July from
the previous year. [ID:nN30172032]

U.S. personal income rose less than expected last month,
weighing on other currencies due to concerns a sharp slowdown
in the United States could reduce demand for the region’s
exports, particularly those of Mexico. [ID:nN30169545]

The Chilean peso (CLP=: ) firmed 0.14 percent to 498.80 per
dollar, breaking the closely-watched 500 peso-per-dollar level
and touching its strongest intraday value since January 21.

The price of copper rallied to its highest level in more
than three months on Monday, lifting the peso in early trading.
[ID:nN30385327]

The currency has gained support from expectations Chile’s
central bank will have to keep raising interest rates to
control inflation in the post-earthquake boom, said Eduardo
Suarez, an emerging markets strategist at RBC in Toronto.

“To some degree, there was also a reduction in the concerns
about the authorities intervening in the foreign exchange
market in the very near-term,” he added.

Chile’s government has increased its warnings about the
currency’s rapid appreciation but recent comments have been
less forceful, said Suarez.

“The central bank actually said that on a real-effective
exchange rate basis (adjusted for the effects of inflation),
the currency was more or less at fair value at its current
level. So concerns have receded at least at these levels but if
the currency keeps on appreciating we could see some
intervention.”

MEXICO AND BRAZIL’S CURRENCIES SUFFER

The Brazilian real (BRBY: ) weakened for the first time in
four sessions following Monday’s U.S. personal income data,
bidding 0.29 percent weaker at 1.756 reais per U.S. dollar on
the local spot market.

But U.S. growth concerns have hit the Mexican peso
particularly badly since the country relies on its northern
neighbor to buy the vast majority of its exports.

The Mexican currency (MXN=: ) weakened 0.98 percent to 13.148
per dollar, trading at its weakest level in eight weeks.

Analysts said the peso has also come under pressure from
increasing violence in the country which had previously been
largely ignored by investors worldwide.

Suspected drug hitmen killed the mayor of a small town in
northern Mexico on Sunday in a region where two car bombs
exploded last week and the bodies of 72 murdered migrant
workers were found. [ID:nN29135738]

EMERGING MARKETS-Chile’s peso firms on copper; region weaker