RIO DE JANEIRO: Latin American currencies gained on Monday as investors kicked off the last quarter of the year with renewed appetite for risk, eyeing a surprise expansion in the US manufacturing sector and ongoing monetary stimulus by major central banks.
The Mexican peso rose 0.5 percent to 12.8016 per US dollar after data showed the manufacturing sector of the United States, Mexico's main trading partner, expanded in September for the first time since May.
The Brazilian real was flat at 2.0265 per greenback, however, as investors avoided making strong bets on the currency for fear of central bank intervention.
Brazilian policymakers have managed to keep the real weaker than 2 per dollar -- a level they consider beneficial to exporters -- since early July.
"Here the concern is that the central bank will step into the market if the dollar weakens too much. For now, nobody is willing to fight the central bank," said Mario Battistel, head of the currency desk at Fair Corretora, a brokerage in Sao Paulo.
Investors have been revising their estimates for stronger Latin American currencies as more dollars are expected to flow into emerging markets as a result of stimulus measures deployed by the US Federal Reserve and the European Central Bank.
They now expect the peso to finish 2012 at 12.88 per dollar, stronger than the level of 13.01 forecast a month ago, a survey by the Mexican central bank with private analysts showed.
In Chile, the peso gained 0.4 percent, recovering part of the losses seen on Friday, when threats of government intervention caused the currency to slump the most in seven weeks.
Fears of intervention in Chile have grown after central bank chief Rodrigo Vergara said policymakers may intervene during "exceptional periods" in which the exchange rate is significantly out of line with fundamentals.
The move by Chile pushed it closer to the stance of policymakers in Brazil, Colombia and Peru who have been intervening in markets to fight dollar inflows that have lifted their currencies and hurt exporters.
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