EMERGING MARKETS-Fed easing bets lift Brazil real, Mexico peso

(Repeats to additional subscribers)

* Brazil’s real gains 0.66 pct, Mexican peso adds 0.3 pct

* Tuesday’s Fed statement fuels rally across region

* Record high international reserves in Mexico favor peso
(Adds comments, updates prices)

By Samantha Pearson and Caroline Stauffer

SAO PAULO/MEXICO CITY, Oct 13 (BestGrowthStock) – The Brazilian
real firmed to a two-year high on Wednesday as traders bet more
monetary easing in the United States would increase flows into
the country’s debt market.

Mexico’s currency also extended a recent rally to reach its
strongest levels in nearly five months, but Chile’s peso
weakened as traders took profits on the currency after it hit a
29-month high in the previous session.

Minutes from the Federal Reserve’s September meeting,
released on Tuesday when Brazil’s markets were closed for a
holiday, indicated that policymakers were considering buying
more longer-term U.S. government debt to drive borrowing costs
lower. [ID:nN12188145]

Such measures, known as quantitative easing, could keep
yields on U.S. Treasuries close to record lows, encouraging
investors to pour more money into higher-yielding debt across
the whole of Latin America.

Brazil is one of the most attractive destinations, given
its high interest rates.

The Brazilian real (BRBY: ) was bid 0.66 percent stronger at
1.653 reais per U.S. dollar on the local spot market, as
traders rushed to price in Tuesday’s news.

“[The Fed statement] was conducive to the same trade we’ve
been seeing: sell the dollar and buy emerging markets,” said
Win Thin, senior currency strategist at Brown Brothers Harriman
in New York.

“But it’s not just about the Fed asset purchases,” he said.
Low interest rates across much of the developed world will
continue to encourage investors to pour money into the region,
he added.

MEXICAN PESO GAINS; CHILE SELLS OFF

The Mexican currency (MXN=: ) strengthened 0.26 percent to
12.375 per dollar.

“The most important factor supporting the peso continues to
be liquidity from abroad after the Fed practically confirmed
that it is preparing for quantitative easing yesterday,” said
Luis Flores, an economist at brokerage IXE in Mexico City.

After strong advances in the previous session, the Chilean
peso (CLP=: ) weakened 0.5 percent to 477.70 per dollar as
traders took profits.

The Chilean peso has soared over recent months, partly due
to a rally in the price of copper, the country’s main export.
The Andean country is also experiencing high growth rates, as
its economy rebounds much more quickly than expected from the
effects of a devastating earthquake in February.
(Additional reporting by Maria Jose Latorre and Froilan Romero
in Santiago and Lorena Segura in Mexico City; Editing by Dan
Grebler)

EMERGING MARKETS-Fed easing bets lift Brazil real, Mexico peso