MEXICO CITY: Mexico's peso hit its strongest level in more than two years on Tuesday and Brazil's real closed at its highest since August 2008 as the US dollar weakened broadly ahead of an expected EU interest rate hike.
The euro neared a recent five-month peak against the dollar on bets the European Central Bank was poised to raise rates on Thursday.
Meanwhile, minutes from the US Federal Reserve's March meeting showed differences between members but did not suggest the Fed would move more quickly than expected to curb its easy monetary policy.
"Dollar weakness is a very clear tendency, and the Fed is not doing anything to change this. Meanwhile, Europe is seen raising interest rates," said Ramon Cordova, a trader at brokerage BASE in Monterrey. "This should help the peso."
The Fed's ultra-easy monetary policies have supported Latin American currencies by boosting the allure of the much higher yields on the region's debt compared with US Treasuries.
Mexico's peso firmed 0.2 percent to 11.8245 per dollar, pulling back slightly after it marked a fresh intraday high at 11.8055 per dollar, its strongest since October 2008.
The region's currencies were supported by bets that China's move to tighten borrowing costs would manage to tame growth without undermining high prices for the region's commodities.
China's central bank increased interest rates for the fourth time since October as it seeks to curb inflation. But commodity prices took the news in stride.
China is Brazil's top trading partner and also one of Chile's top customers for its copper.
Brazil's currency bid 0.25 percent firmer to 1.607 per dollar, its strongest close on the local spot market since August 2008.
Last week, the real broke a key level past 1.65 per dollar that the government had been seen defending. Some analysts think authorities could try to contain the real to around 1.60 per dollar.
Doug Smith, head of Latin America research at Standard Chartered in New York, said a gradual appreciation of the Chinese currency could ease concerns in Brazil and Chile that strong local currencies are undermining their manufacturers' ability to compete with Chinese-made products.
Chile's peso bid up 0.32 percent at 473.10 per dollar, trading at its strongest intraday levels in a month.
Surprisingly strong growth data in Chile spurred expectations of a hefty hike in the benchmark interest rate next week.
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