RIO DE JANEIRO: Hopes the Chinese government may unveil new stimulus measures that would benefit Latin American exporters supported most of the region's currencies on Tue sday, but the Brazilian real weakened as investors tested the central bank's resolve to intervene in the market.
The real lost 0.6 percent to 1.9960 per US dollar as investors wondered whether the central bank would resume the sale of currency swaps after a one-day hiatus.
"The market is trying to find out how tolerant the central bank will be" toward a weaker real, said Flavia Cattan-Naslausky, Latin America forex strategist with RBS bank. "For now, the market believes that level is 2.05 per dollar."
The central bank started auctioning swaps to support the currency on May 18, when the real traded slightly above the 2 per dollar level.
It stepped up its market intervention in the following week as the real continued to weaken to 2.1 per greenback, and eventually succeeded in bringing it back through the level of 2 per dollar on Friday.
Other Latin American currencies were little changed from Monday's close on hopes that China, the largest consumer of Latin American commodities' exports, will act to prevent a sharp economic slowdown.
Such expectations increased after the official Shanghai Securities News reported that China's largest banks appeared to have accelerated lending toward the end of the month.
The Mexican peso was near flat at 13.945 per dollar. On Monday, Central bank Governor Agustin Carstens said the peso will likely rebound once European debt fears dissipate.
Chile's peso was also little changed, at 512.50 per dollar, after closing at a 4-1/2-month low of 512.70 in the previous session.