RIO DE JANEIRO: Brazil's real and Mexico's peso weakened on Thursday after comments by a US Federal Reserve official tempered hopes for stimulus measures by the Fed in the near future to prop up the world's largest economy.
On Wednesday, Federal Reserve minutes showed officials were leaning toward more stimulus soon unless the economy improves, spurring gains in the Mexican peso.
However, St. Louis Fed President James Bullard, a non-voting member of the Federal Open Market Committee, said on CNBC Thursday that US data has been somewhat better since the last Fed meeting and the minutes were "a bit stale."
Expectations of impending monetary stimulus measures in the United States tends to drive down yields on Treasuries and boost the appeal of higher-yielding emerging market assets.
Mexico's peso lost 0.67 percent to 13.1685 while Brazil's real dipped 0.33 percent to 2.0253 per dollar on Thursday.
"Clearly the market is still focused on the Federal Reserve," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York, adding that today's moves weren't significant or decisive.
The Mexican peso has traded in a narrow range in recent weeks, as investors wait for clues on whether central banks in the United States and Europe, where a debt crisis is weighing on the economy, will take policy action to boost sluggish growth.
Data on factory activity in China, which contracted at its fastest pace in nine months during August, also hurt Brazil's real. China is Brazil's top trading partner.
"The driver for the real today is what is happening abroad, in particular the disappointing data from China," said Darwin Dib, chief economist for CM Capital Markets in Sao Paulo.
But some speculated that slowing factory activity could spur China to adopt new monetary measures to boost growth and revive demand for raw materials, a key export of Latin American countries.
Meanwhile, stronger copper prices drove Chile's peso up 0.29 percent to 480.3000 against the dollar.
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