SAO PAULO: The Mexican peso fell on Monday as the government suspended a dollar-sale mechanism designed to prevent a sharp currency depreciation, while the Brazilian real ended little changed after weakening on Friday past the 2-per-dollar mark for the first time in two weeks.
Bets that Japan's unprecedented monetary stimulus will support capital inflows into higher-yielding emerging market economies boosted other Latin American currencies.
The Chilean peso rose 0.4 percent to 466.90 per dollar, its strongest level in more than one-and-a-half years, nearing levels that prompted the central bank to launch a dollar-purchasing program in early 2011.
In Mexico, the peso initially hit a 20-month high of 12.1265 per dollar during the session but erased all of those gains after the government said it was suspending a mechanism of automatic dollar auctions triggered by sharp currency losses.
The peso briefly fell past 12.20 per dollar, settling around 12.1870 per greenback later, as analysts viewed the measure as increasing risks for investors who have been decidedly betting on a stronger currency.
"I do expect some clear-out of the (long Mexican peso) positions," said Flavia Cattan-Naslausky, a currency strategist with RBS.
On the other hand, the Brazilian real ended practically unchanged at 1.9860 per dollar.
It initially rose slightly on expectations that Japan's monetary stimulus would translate into additional capital inflows to Brazil, gains were not sustained as investors later decided to pocket some profits.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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