SAO PAULO/MEXICO CITY: The Mexican and Chilean pesos weakened on Thursday after another round of stimulus by central banks in Europe and China failed to ease investors' concerns about a global economic slowdown.
The European Central Bank cut interest rates to a record low but steered clear of bolder measures, such as flooding banks with additional liquidity.
The Mexican peso weakened 0.62 percent as some investors were disappointed the ECB did not make a stronger move.
The Brazilian real firmed 0.2 percent to 2.0229, bouncing after two sessions of losses on concerns authorities could buy dollars to weaken the currency.
"There were hopes the ECB could launch another round of long-term refinancing operations to inject liquidity in the financial system," said Gabriel Lozano, a senior economist with Santander in Mexico City.
A recent wave of cheap long term loans from Europe's Central Bank aimed at easing pressure on the stressed financial sector rallied Latin American markets earlier in the year as investors rushed to higher yielding markets.
Unlike Brazil, Mexico's central bank has steered clear of interfering in the currency markets making the country a safer bet for foreign investors.
The yield on Mexico's 10-year bond bid down 10 basis point on Thursday to 5.19 percent, trading near a record low. The 10-year yield has fallen more than 100 basis points since late May.
Unlike recent past waves of global central bank liquidity that have bolstered the real's value against the dollar, Brazilian policymakers are not expecting a new wave of hot money to drive strong gains in the currency.
Brazil's aggressive interest rate cuts have killed the allure of the real for carry-trade operations, in which investors borrow at low interest rates to buy assets in higher-yielding currencies, said a senior source at President Dilma Rousseff's economic team.
"We don't see signs of any (capital) tsunami," said the source, adding that a weaker real is also sapping investors' interest for Brazilian assets. Brazil is seen slashing its key interest rate to an all-time low of 8.0 percent next week as policymakers try to support a faltering economy.
The ECB move, which was widely anticipated by investors, followed the Bank of England's expected decision to launch a third round of stimulus and a surprise interest rate cut by the Chinese central bank.
Investors are concerned the Chinese economy may be slowing more than anticipated, which could further weigh on commodities exports from Latin America.
The Chilean peso fell 0.2 percent to 495.35 per dollar, but still traded in a range between 494 and 498 per dollar.
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