SAO PAULO: The Mexican peso and the Brazilian real strengthened on Monday after heavy losses last week, but concerns lingered about erratic currency policy in China.
The Chinese central bank let the yuan rise for the second day in a row after allowing the currency to post its biggest loss in five months less than a week earlier.
Traders had interpreted the slide in the yuan as a sign of wider economic weakness in the world's second biggest economy. Chinese stocks tumbled on Monday as confused investors tried to parse policymakers' intent.
"The Chinese refuse to fix things," said Pedro Tuesta, an economist with 4Cast Inc in Washington D.C. "The Mexican peso is having a technical rebound, but with oil prices down we should expect a test to 18 per dollar soon."
The Mexican peso strengthened about 0.6 percent to 17.8 per dollar after hitting a record low on Friday. The move came even though crude prices dropped for a sixth day on geopolitical worries and a global supply glut.
The Brazilian real also advanced after the country's central bank vowed to take action to curb double-digit inflation. Yields paid on short-term interest rate futures contracts rose as traders bet on a rate hike this month.
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