Latin American currencies strengthened on Friday, after at least two days of heavy losses that followed signals the US Federal Reserve is preparing to shut down its stimulus program. The Fed's bond-buying program has provided a steady source of dollars seeking higher returns in emerging market economies and investors fear its end could dramatically reduce the appeal of risk assets.
Friday's gains were seen as a temporary rebound from recent losses, however, as more declines are expected when it becomes clearer when exactly the Fed will start to taper its stimulus. Brazil's real gained 0.6 percent to 2.2438 per dollar, a day after five consecutive sessions of losses took the currency to its weakest level in more than four years.
Mexico's peso firmed 0.3 percent, also halting a string of five losing sessions, as central bankers said they were prepared for further shocks to the peso resulting from the unwinding of US stimulus. Chile's peso closed nearly half a percentage point stronger, also supported by gains in the price of copper, the country's main export product.
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