EMERGING MARKETS-Peru's currency at 2-yr high, region struggles
Tue Aug 3, 2010 6:25pm EDT
* Brazil's real loses 0.5 pct, Mexican peso dips 0.1 pct
* World Cup fever partly to blame for Brazil June slowdown
* Chilean peso firms as investors price in rate hike
(Recasts; adds comments)
By Samantha Pearson and Michael O'Boyle
SAO PAULO/MEXICO CITY, Aug 3 (Reuters) - Peru's currency climbed to its strongest level in two years on Tuesday, after a Brazilian industrial conglomerate became the latest company to take its share of one of the world's fastest growing economies.
Brazil's Votorantim announced that it had finally gained control of Peruvian miner Milpo on Tuesday. The Peruvian sol PEN=PE firmed 0.4 pct to 2.8050 as the Brazilian company moved to snap up the currency to complete the purchase of its latest stake, said traders in Peru's capital Lima.
The deal helped Peruvian markets shrug off a further battering of weak U.S. data which prompted losses among the continent's major currencies.
Peru's currency has surged about 16 percent since its low in March 2009 as the country's economy has bounced back from the financial crisis thanks to a huge construction boom.
Economic growth is expected to hit 6.6 percent in 2010, the government said in June, ranking Peru alongside Brazil as the fastest growing countries in the region and the world.
"Market players are expecting a greater appreciation of the nuevo sol, due to the strong fundamentals of Peru's economy and more dollars coming in thanks to higher exports and private investment," said Jose Razuri, analyst at the Maximixe consultancy in Lima.
Chile's peso CLP=CL also firmed on Tuesday, gaining 0.3 percent to 516.50 per dollar to hit a fresh three-month intraday high against the U.S. dollar.
After a devastating earthquake in February, Chile's economy has sprung back faster than most economists were expecting. And strong growth has prompted investors to bet the country's central bank will have to raise interest rates by more than expected over the coming months in an effort to contain inflation.
BRAZIL AND MEXICO LOSE OUT
But the currencies of Brazil and Mexico, the dual powerhouse of Latin American growth, suffered losses on Tuesday due to concerns that the U.S. recovery is faltering.
Data showed U.S. factory orders fell steeply in June while an index of pending home sales plunged to a record low in the same month.
U.S. growth is vital for Latin America's own economic health since the region exports huge amounts of agricultural and mineral goods to the United States.
The Mexican currency MXN= dipped 0.1 percent to 12.5830 per dollar.
Brazil's real was under further pressure from a combination of local concerns, weakening 0.5 percent to 1.758.
A drop in industrial production in Brazil during June added to recent signs that growth in Latin America's biggest economy is slowing. For details, see [ID:nN03274323]
"The weak industrial performance in the second quarter confirms the expectation of a sharp slowdown of the economy during that period," said Luciano Rostagno, the chief strategist for CM Capital Markets in Sao Paulo, in a note to clients. However, the recent World Cup soccer tournament may have affected production, since many fans in Brazil took days off work to watch the games, he said.
Investors were also cautious after the Brazilian real broke through the key 1.75 level in the previous session, prompting further speculation that Brazil's central bank may step up its intervention in the market.
Tue Aug 3, 2010 6:25pm EDT
* Brazil's real loses 0.5 pct, Mexican peso dips 0.1 pct
* World Cup fever partly to blame for Brazil June slowdown
* Chilean peso firms as investors price in rate hike
(Recasts; adds comments)
By Samantha Pearson and Michael O'Boyle
SAO PAULO/MEXICO CITY, Aug 3 (Reuters) - Peru's currency climbed to its strongest level in two years on Tuesday, after a Brazilian industrial conglomerate became the latest company to take its share of one of the world's fastest growing economies.
Brazil's Votorantim announced that it had finally gained control of Peruvian miner Milpo on Tuesday. The Peruvian sol PEN=PE firmed 0.4 pct to 2.8050 as the Brazilian company moved to snap up the currency to complete the purchase of its latest stake, said traders in Peru's capital Lima.
The deal helped Peruvian markets shrug off a further battering of weak U.S. data which prompted losses among the continent's major currencies.
Peru's currency has surged about 16 percent since its low in March 2009 as the country's economy has bounced back from the financial crisis thanks to a huge construction boom.
Economic growth is expected to hit 6.6 percent in 2010, the government said in June, ranking Peru alongside Brazil as the fastest growing countries in the region and the world.
"Market players are expecting a greater appreciation of the nuevo sol, due to the strong fundamentals of Peru's economy and more dollars coming in thanks to higher exports and private investment," said Jose Razuri, analyst at the Maximixe consultancy in Lima.
Chile's peso CLP=CL also firmed on Tuesday, gaining 0.3 percent to 516.50 per dollar to hit a fresh three-month intraday high against the U.S. dollar.
After a devastating earthquake in February, Chile's economy has sprung back faster than most economists were expecting. And strong growth has prompted investors to bet the country's central bank will have to raise interest rates by more than expected over the coming months in an effort to contain inflation.
BRAZIL AND MEXICO LOSE OUT
But the currencies of Brazil and Mexico, the dual powerhouse of Latin American growth, suffered losses on Tuesday due to concerns that the U.S. recovery is faltering.
Data showed U.S. factory orders fell steeply in June while an index of pending home sales plunged to a record low in the same month.
U.S. growth is vital for Latin America's own economic health since the region exports huge amounts of agricultural and mineral goods to the United States.
The Mexican currency MXN= dipped 0.1 percent to 12.5830 per dollar.
Brazil's real was under further pressure from a combination of local concerns, weakening 0.5 percent to 1.758.
A drop in industrial production in Brazil during June added to recent signs that growth in Latin America's biggest economy is slowing. For details, see [ID:nN03274323]
"The weak industrial performance in the second quarter confirms the expectation of a sharp slowdown of the economy during that period," said Luciano Rostagno, the chief strategist for CM Capital Markets in Sao Paulo, in a note to clients. However, the recent World Cup soccer tournament may have affected production, since many fans in Brazil took days off work to watch the games, he said.
Investors were also cautious after the Brazilian real broke through the key 1.75 level in the previous session, prompting further speculation that Brazil's central bank may step up its intervention in the market.