SAO PAULO: Latin American currencies weakened on Tuesday on lower commodity prices as investors awaited Federal Reserve Chair Janet Yellen's speech later in the day.
Crude prices fell more than 3 percent on fears that global oil oversupply could put an end to a two-month rally. Traders doubt major producers will agree to cut output in a meeting next month.
That hurt the currencies of oil exporters, such as the Colombian and Mexican pesos .
Many traders also bet Yellen could reinforce the Fed's intention to raise rates sooner rather than later, a move which could drain capital away from high-yielding emerging markets.
A series of Fed policymakers publicly endorsed last week plans to raise rates at least twice this year, with the first increase possibly coming as soon as April.
The Brazilian real underperformed its peers after the central bank once again acted to weaken the currency. The bank sold almost $1 billion in reverse currency swaps, which function like buying dollars in futures markets, feeding speculation that it could favor a weaker currency to protect exports.
"The central bank is signaling that it will act to contain the real's strength," said Ricardo Gomes da Silva, a trader with Correparti brokerage.
The move comes ahead of a key meeting later on Tuesday when Brazil's biggest party is expected to abandon the government coalition. Leftist President Dilma Rousseff is facing impeachment proceedings in Congress and the move could tip the odds in favor of her ouster.
Shares of Ita? Unibanco Holding SA fell after central bank data showed commercial banks pared lending for a second straight month in February amid profound economic weakness. Goldman Sachs cut its recommendation for stocks of the country's biggest private bank to "sell".
Shares of Companhia Sider?rgica Nacional also fell as traders brushed off an increase in quarterly profit and focused on the steelmaker's high leverage.
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