By Michael O'Boyle
MEXICO CITY (Reuters) - Mexico's peso and Brazil's
real edged up Friday after being battered through the week
by concerns about slowing growth in the United States even as
losses were contained by flows into the region's bonds.
Chile's peso brushed off global concerns to surge about 1
percent this week as the central back hiked interest rates for
the third month in a row. But Colombia's peso sank more than 1
percent since the previous Friday amid the threat of government
intervention in the exchange market.
The U.S. Federal Reserve expressed deeper concerns about
U.S. growth this week that rattled stock and currency markets.
Some investors are betting the U.S. economy could slip back
into recession after recovering from a deep slump last year.
"There is real uncertainty about the economic activity in
the United States, and this will keep affecting the foreign
exchange market," said Salvador Orozco, a currency and debt
strategist at Santander in Mexico City.
But investors sitting on cash were drawn to Latin American
bonds. Local debt offers higher yields than the meager returns
on government bonds in major developed markets, where
policymakers have pledged to keep interest rates low to support
More prudent fiscal management in Latin America during the
past decade has put the shine on local debt amid Europe's debt
Mexico's benchmark 10-year peso bond shed 25
basis points this week to bid at a record low of 6.29 percent
"We never thought we would see such low yields, but it is a
function of the foreigners' liquidity," Orozco said.
The Mexican peso edged up 0.07 to 12.7225 per dollar
Friday after data showed rising, but still tepid, U.S.
August consumer confidence and July retail sales. The peso shed
0.31 percent for the week.
Brazil's real bid 0.11 percent stronger at 1.770 per
dollar in the local spot market. In international trade, the
real shed about 0.7 percent for the week.
Colombia's peso sank for a second straight session due to
concerns local authorities will intervene in the foreign
exchange markets to cool sharp currency gains that are hurting
Colombia's peso shed 0.47 percent to 1,834.90
per dollar, racking up a 1.1 percent loss for the week.
Before sharp losses in the last two sessions, the Colombian
currency had gained about 12 percent since early May, boosted
by investment flows into the country's oil and mining
industries, which also drew speculative traders.
Analysts think Colombia could reinstate daily dollar
purchases that expired in June, but that would do little more
than slow the pace of gains.
Chile's peso closed at a five-month high Friday, a day
after the country's central bank raised its benchmark interest
rate to 2 percent, in line with expectations, as the economy
bounces back from a devastating earthquake.
Chile's peso's edged up 0.02 percent to 509.40 per
dollar, posting a 1 percent gain for the week.
The country's currency has firmed about 7 percent since
the end of June. Chilean President Sebastian Pinera hinted
Thursday the government could cash in less dollar revenue from
copper sales to offset the flows into Chilean assets.
But analysts looked for the currency to firm further on
expectations of more interest rate hikes by the central bank,
which is seen taking its benchmark rate to 3.75 percent by
(Additional reporting by Jean Luis Arce in Mexico City;
Editing by Dan Grebler)