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SAO PAULO, Nov 24 (Reuters) - Latin American currencies rose on Tuesday after economic growth data supported bets that the U.S. Federal Reserve will take a gradual approach to raising interest rates after an initial hike expected next month.
Although higher U.S. rates could lure investment away from emerging market economies, traders said they had largely adjusted to the idea of a Fed rate increase in December and were focused instead on what would come next.
"The idea is now that the Fed will not go crazy hiking rates. The transition will be smoother. A couple of hiccups and that's it," said Pedro Tuesta, an economist with research firm 4cast.
The U.S. government earlier on Tuesday upwardly revised its data to show the U.S. economy growing at a 2.1 percent annual pace, up from a rate of 1.5 percent reported last month. That could set up the economy to grow at least 2 percent in the second half of the year, around its long-term potential.
The Mexican and Colombian pesos rose 0.12 percent and 0.8 percent respectively, helped by a rally in oil prices as the downing of a Russian-made fighter jet near the Syria-Turkey border reignited tensions in the Middle East.
The Brazilian real jumped 0.98 percent after the central bank announced it would sell as much as 500 million reais ($135 million) in U.S. dollar repurchase agreements, the seventh such sale this month. The central bank usually steps up so-called repos at year-end to ease the scarcity of dollars due to seasonal demand.
Trading volumes in Brazil were thin on the first day of a two-day central bank policy meeting. According to a Reuters poll of economists, the bank is likely to hold its benchmark rates steady at a nine-year high. (Reporting by Bruno Federowski, editing by G Crosse)