RIO DE JANEIRO: Latin American currencies rose on Friday in thin post-holiday trading, as lower US Treasuries yields encouraged some investors to look for bargains in emerging markets after strong losses on Thursday.
Anxiety about the pace of US stimulus withdrawal, which on Thursday drove 10-year Treasuries yields to a 2-1/2-year high of more than 3 percent, has been sapping investor appetites for higher yielding, riskier emerging market assets.
Yields on 10-year Treasuries were slightly below 3 percent on Friday at the beginning of a New York trading session that is expected to be slow as many investors remain out of the office due to the holidays and an ongoing snowstorm.
As the US economy shows signs of recovery, the US Federal Reserve will start this month to wind down - by $10 billion to $75 billion a month - its bond-buying program, which is meant to keep US interest rates low. During the past several years, a considerable amount of money has flowed into emerging markets as investors sought higher returns.
The Brazilian real gained 0.77 percent to 2.3722 per dollar, after sliding to as much as 2.4093 on Thursday, its weakest intraday level since Aug. 27, 2013.
Analysts said the Brazilian currency is more prone to weaken after the central bank halved a forex intervention program that helped cushion the real's fall in 2013.
As part of their new intervention program, Brazilian policymakers on Friday sold all of the 4,000 currency swaps offered at an auction. Those are derivative contracts that provide investors with protection against a weaker real.
Low trading volumes also left the real subject to sharper fluctuations dictated by dollar inflows or outflows, said Reginaldo Galhardo, a manager at the currency desk of Treviso brokerage in Sao Paulo.
The Mexican peso gained 0.6 percent to 13.075 per dollar, after falling more than 1 percent to as low as 13.027 on Thursday.
Chile's peso rose a more modest 0.2 percent as a decline in the price of copper, the country's main export, weighed on the performance of the Chilean currency.
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