EMERGING MARKETS-Mexico, Colombia peso up for 2nd day on higher yuan
By Bruno Federowski SAO PAULO, Feb 15 (Reuters) - Latin American currencies advanced for a second day on Monday after China's central bank allowed the yuan to strengthen, easing global concerns following a week of deep risk aversion. Worries over global economic weakness and a continued slump in oil prices hurt demand for emerging market assets last week while Chinese markets were closed for the Lunar New Year holiday. Nevertheless, China's central bank fixed the yuan at its highest rate this year and played down speculation that it could adopt capital controls. Offshore rates for the yuan posted its biggest rise since 2005, eliminating a gap with the onshore rate that had stoked fears of capital outflows. The move allayed concerns that a weaker yuan could generate worldwide deflationary pressure, hampering the global economic recovery. A stronger currency at the world's biggest consumer of commodities could also boost trade with Latin American countries, typically big exporters of basic products. The Mexican peso and the Colombian peso strengthened after hitting all-time lows last week, though trading volumes were thin due to a U.S. holiday. Both currencies also benefited from a recovery in oil prices amid speculation that OPEC could agree to cut production. However, analysts expected the relief to prove short-lived. Colombia's peso should trade between 3,500 and 4,000 per U.S. dollar over the following quarters, compared to about 3,400 currently, strategist Mario Robles at Nomura Securities said in a client note. He expects the country's central bank to react by increasing its benchmark rate by an additional 100 basis points, to 7.0 percent, seeking to fight growing inflation expectations. Latin American stock indexes and currencies at 1450 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 725.65 2.03 -10.44 MSCI LatAm 1709.70 1.28 -7.75 Brazil Bovespa 40366.72 1.4 -6.88 Mexico IPC 42617.44 0.47 -0.84 Chile IPSA 3682.90 0.42 0.07 Chile IGPA 18099.22 0.37 -0.29 Argentina MerVal 11516.86 2.13 -1.36 Colombia IGBC 8826.20 0.31 3.26 Venezuela IBC 15082.74 2.57 3.39 Currencies daily % YTD % change change Latest Brazil real 3.9945 -0.14 -1.19 Mexico peso 18.8550 0.29 -8.62 Chile peso 700.2 0.60 1.36 Colombia peso 3378 0.12 -6.18 Peru sol 3.504 0.06 -2.57 Argentina peso (interbank) 14.8000 -0.47 -12.28 Argentina peso (parallel) 14.95 0.00 -4.55 (Reporting by Bruno Federowski; Editing by Diane Craft)
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