MEXICO CITY/RIO DE JANEIRO: Mexico's peso led gains among Latin American currencies but the pace of a four-week rally could be easing with investors showing caution as Greece races to complete a debt deal.
Mexico's peso firmed 0.72 percent to 12.9155, in its tenth straight session of gains. Brazil's real firmed 0.32 percent to 1.7376 to the dollar. Chile's peso closed at a four-month high, firming 0.43 percent to 484.30.
Easing concern about European debt has seen Latin American currencies surge this month.
The Mexican peso, Colombian peso, Chilean peso and Brazilian real have all gained about 7 percent this year, and make up four of the eight biggest gainers of the 152 currencies tracked against the dollar by Thomson Reuters.
Further supporting sharp gains this week, the Federal Reserve forecast it could keep interest rates near zero until 2014, in an effort to bolster the United States economy, which supported gains for higher-yielding emerging market assets.
But analysts see the advances being curbed.
"Unless we get another game changing event, the momentum in the rally will slow down some," said Maya Hernandez, a Latin American strategist at HSBC Bank in New York, adding that the peso's gains have been "too quick."
Slowing the rally on Friday, fresh data showed the United States, the world's largest economy, grew at an annualized rate of 2.8 percent in the fourth quarter. While the expansion was the biggest in 1-1/2 years it was below the 3 percent average estimate of 74 analysts surveyed by Reuters.
Greece and non-government holders of its sovereign bonds are in talks in an effort to reduce the amount the country owes and cut its debt to gross domestic product ratio to about 120 percent.
Failure to win large concessions could lead to a Greek default and bank losses across Europe, a situation that could cause lending to freeze up, jeopardizing economic growth and the solvency of other countries.
"After the recent rally we're waiting on the Greece negotiations," said Luciano Rostango, chief currency strategist at the Sao Paulo unit of WestLB a German bank.
In Brazil, a move closer to 1.70 per dollar is viewed by investors as a threshold that could spur central bank intervention, which could limit gains in the real.
Elsewhere in Latin America, Peru's sol firmed 0.08 percent to 2.6890 to the dollar.
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