Latin American currencies strengthened on Friday after China's quarterly economic data allayed concern of a steep slowdown in the world's second largest economy. Economic growth in China, the world's biggest consumer of raw materials, was in line with expectations, spurring optimism among investors who had feared signs the country was heading toward a hard landing.
Gains in the real, however, were limited by fears about further intervention from Brazil. "The market has been looking for some news that is not completely negative, and today we had this idea that the Chinese GDP could have been worse," said Sidnei Nehme, a director at NGO brokerage in Sao Paulo.
The sentiment buoyed the Mexican peso, on track to close at a two-month high, up 1.05 percent to 13.3050 against the greenback. The Chilean peso also hit a two-month high, firming 0.65 percent.
Chile's currency was further bolstered by a more than 2 percent jump in the price of copper, the country's main export product.
Both currencies clocked weekly gains with Mexico's peso strengthening about 1 percent and the Chilean currency firming around 1.5 percent. But investors have held back, concerned about the fragile state of the global economy.
Investors "are still waiting for further economic data," said Marco Oviedo, an economist at Barclays in Mexico City, adding that next week's performance will "depend on how investors perceive the global economy."
Eyes will be fixed on Europe and US industrial production data, he said, forecasting that the peso would likely trade between 13.20 per dollar and 13.40.
In Brazil, the real edged up 0.11 percent to 2.0367 per dollar, but concern about possible government intervention weighed.
Earlier this week, Brazil cut its key interest rate to a record low in a move to kick-start its sluggish economy. At the same time, the central bank has recently been buying and selling dollars in the local spot market to control volatility in the currency.
"There's very little incentive for a hedge fund or a real money guy to bet on appreciation if there is a clear risk of intervention to cap the move," said Diego Donadio, Latin America currency and debt strategist for BNP Paribas in Sao Paulo.
The currency has been trading within a very narrow range between 2.00 and 2.05 reais per dollar in the past eight sessions.
Investors have been holding back bets in Brazil and placing their money in Latin America's second largest economy, Mexico, where the central bank has a hands-off approach to its currency.