Aug 25 (Reuters) - Latin American currencies traded mixed against the U.S. dollar on Thursday, with the Mexican peso gaining and Brazil's real weakening, on the day before a planned address by the head of the U.S. central bank.
Ben Bernanke, chairman of the U.S. Federal Reserve, is scheduled to give an address to the Jackson Hole Economic Symposium on Friday at an annual gathering of world economists and central bankers in the Rocky Mountains.
Investors have been divided between those betting Bernanke will announce new measures to jumpstart the U.S. economy and those who think he won't, causing wide swings in the region's currencies in recent days.
Those betting on new measures expect Bernanke to announce or signal expansion of the Fed's "quantitative easing" program -- a stimulus program in which the Fed bought outstanding U.S. government debt.
That plan ended in June after flooding the economy with $600 billion of cash. Bernanke outlined that program at last year's symposium in Jackson Hole, Wyoming.
That cash has helped Latin American currencies gain this year as global investors borrow at near-zero rates in the U.S. to invest at higher yields in Latin America.
"All eyes are on Jackson Hole. Tomorrow is the day and everybody is hoping Bernanke will come up with some kind of miracle to pull the U.S. economy out of its doldrums," said Jankiel Santos, chief economist with BES Investimentos, the Sao Paulo unit of Portugal's Banco Espirito Santo.
"Sadly there's not much chance of that."
EXTREME VOLATILITY
Brazil's real BRBY weakened 0.08 percent to 1.6110 to the dollar.
Brazilian 10-year, local-currency NTN bonds BR10YT=RR rose 0.49 to 912.69 or 91.27 percent of face value. The yield fell to 11.96 percent.
The real traded in a seesaw fashion much like world stock markets, said Rafael Dornaus, a market analyst with Hencorp Commcor, a Sao Paulo brokerage.
"The volatility is terrible and the markets are blowing up or falling down even on tiny news," he said. "There is really nothing orienting the market in any consistent way today."
Mexico's peso MXN=D2 gained 0.53 percent to 12.4186 to the dollar.
"If you're looking for clear reasons for why things are moving today, things that are fundamental and different, things that have happened in the last 72 hours, I really can't give you much," said Alberto Ramos, chief economist with Goldman Sachs in New York.
"In Mexico's case, the news has actually been marginally bad. It appears that with the U.S. sluggishness, Mexico is going to face headwinds in the near future, yet the peso is rising," he said.
Mexican local-currency bonds, which fell on Wednesday, rose on Thursday and their yields remain attractive compared with U.S. debt, Ramos said.
Mexico's 10-year "bono" MX10YT=RR rose 0.25 to a bid price of 103.77 percent of face value. Its yield slipped 4 basis points 6.15 percent. The yield on a comparable U.S. Treasury is 2.22 percent US10YT=RR
"Nothing is getting any better, and without a clear solution in the United States or Europe, we are just seeing relief rallies, but the root problems are not being solved," said Deborah Ausina, a trader at Bulltick Capital Markets in Miami.
Investors interested in Mexican bonds have been looking to buy when the peso weakens to about 12.50 to the dollar, she said.
If the market is disappointed with Bernanke's speech, the peso could slump back toward the one-year low of 12.7633 per dollar that it reached on Aug. 9, she said.
Colombia's peso COP2=STFX weakened 0.33 percent to 1,791.85 to the dollar.
Chile's peso was little changed from Wednesday at 466.60, Peru's sol was little changed at 2.7320 and Argentina's official peso ARS=RASL was little changed at 4.1850.
Argentina's unofficial, or "parallel" market peso, extended losses toward an all-time low, weakening 0.57 percent to 4.4100.
Source: www.reuters.com
Ben Bernanke, chairman of the U.S. Federal Reserve, is scheduled to give an address to the Jackson Hole Economic Symposium on Friday at an annual gathering of world economists and central bankers in the Rocky Mountains.
Investors have been divided between those betting Bernanke will announce new measures to jumpstart the U.S. economy and those who think he won't, causing wide swings in the region's currencies in recent days.
Those betting on new measures expect Bernanke to announce or signal expansion of the Fed's "quantitative easing" program -- a stimulus program in which the Fed bought outstanding U.S. government debt.
That plan ended in June after flooding the economy with $600 billion of cash. Bernanke outlined that program at last year's symposium in Jackson Hole, Wyoming.
That cash has helped Latin American currencies gain this year as global investors borrow at near-zero rates in the U.S. to invest at higher yields in Latin America.
"All eyes are on Jackson Hole. Tomorrow is the day and everybody is hoping Bernanke will come up with some kind of miracle to pull the U.S. economy out of its doldrums," said Jankiel Santos, chief economist with BES Investimentos, the Sao Paulo unit of Portugal's Banco Espirito Santo.
"Sadly there's not much chance of that."
EXTREME VOLATILITY
Brazil's real BRBY weakened 0.08 percent to 1.6110 to the dollar.
Brazilian 10-year, local-currency NTN bonds BR10YT=RR rose 0.49 to 912.69 or 91.27 percent of face value. The yield fell to 11.96 percent.
The real traded in a seesaw fashion much like world stock markets, said Rafael Dornaus, a market analyst with Hencorp Commcor, a Sao Paulo brokerage.
"The volatility is terrible and the markets are blowing up or falling down even on tiny news," he said. "There is really nothing orienting the market in any consistent way today."
Mexico's peso MXN=D2 gained 0.53 percent to 12.4186 to the dollar.
"If you're looking for clear reasons for why things are moving today, things that are fundamental and different, things that have happened in the last 72 hours, I really can't give you much," said Alberto Ramos, chief economist with Goldman Sachs in New York.
"In Mexico's case, the news has actually been marginally bad. It appears that with the U.S. sluggishness, Mexico is going to face headwinds in the near future, yet the peso is rising," he said.
Mexican local-currency bonds, which fell on Wednesday, rose on Thursday and their yields remain attractive compared with U.S. debt, Ramos said.
Mexico's 10-year "bono" MX10YT=RR rose 0.25 to a bid price of 103.77 percent of face value. Its yield slipped 4 basis points 6.15 percent. The yield on a comparable U.S. Treasury is 2.22 percent US10YT=RR
"Nothing is getting any better, and without a clear solution in the United States or Europe, we are just seeing relief rallies, but the root problems are not being solved," said Deborah Ausina, a trader at Bulltick Capital Markets in Miami.
Investors interested in Mexican bonds have been looking to buy when the peso weakens to about 12.50 to the dollar, she said.
If the market is disappointed with Bernanke's speech, the peso could slump back toward the one-year low of 12.7633 per dollar that it reached on Aug. 9, she said.
Colombia's peso COP2=STFX weakened 0.33 percent to 1,791.85 to the dollar.
Chile's peso was little changed from Wednesday at 466.60, Peru's sol was little changed at 2.7320 and Argentina's official peso ARS=RASL was little changed at 4.1850.
Argentina's unofficial, or "parallel" market peso, extended losses toward an all-time low, weakening 0.57 percent to 4.4100.
Source: www.reuters.com
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