Latin American foreign exchange rates were little changed on Friday as doubts arose over the world economy's ability to sustain currency rallies in Mexico, Chile and Colombia. In Brazil a more than two-week slide eased. The declines came after the government adopted tax and interest-rate measures to slow a flood of foreign capital.
"We have reached a wait-and-see moment," said Michael Woolfolk, senior forex strategist with BNY Mellon in New York. "The incoming data has been mixed but there has been a tendency to cherry pick the good news and the risk now is that there will be a correction." Mexico's peso was nearly unchanged from Thursday, slipping 0.02 percent to 12.6607 per dollar. Rising expectations of improvement in the US economy, which absorbs nearly 80 percent of Mexican exports, has helped the currency rally in recent weeks.
While the peso is little changed on the week it has gained about 1.5 percent this month, making it the best performer out of the 36 most-traded currencies tracked against the dollar by Thomson Reuters in the period. Colombia's peso was little changed, firming 0.03 percent to 1,759.70 per dollar. Earlier it firmed to 1,754.60, its strongest in nearly eight months.
The peso has gained about 0.2 percent on the week and about 10 percent in the last three months, making it the second-biggest gainer in the period among the 36 most-traded currencies against the dollar. The prospect of Greek elections in May is among the factors that could weigh on expectations of stronger world growth, Woolfolk said.
Some candidates in the election want to break austerity plans that are part of accords signed with the International Monetary Fund and European Union to help the country meet its debt payments. Brazil has bucked the regional strengthening trend. Moves by the government to increase taxes on foreign loans and make it easier for exporters to bet against the dollar have eased a flood of low-cost capital from the US, Europe and Japan.
With developed world interest rates near zero, Brazilian rates, which have been above 10 percent for all but 12 months of the last decade, are attractive for investors. The tax moves helped trim the real's gains this year to less than 4 percent from nearly 9 percent earlier this month.
Brazil also helped the real give back gains by cutting its benchmark rate to 9.75 percent from 10.5 percent on March 7, the first drop below 10 percent in nearly two years. Brazil's real was little changed on Friday, firming 0.09 percent to 1.8008 to the dollar. The real, which has lost about 0.6 percent this week, has lost nearly 5 percent in March, the biggest decliner of the 152 currencies tracked against the dollar by Thomson Reuters.