The Mexican peso firmed on Friday after an unexpected drop in the US unemployment rate encouraged investors to take risk in emerging markets, but the Brazilian real fell as the central bank intervened in the foreign exchange market.
The Mexican peso gained 0.4 percent to 12.6958 per dollar after the US Labour Department said the US jobless rate fell to 7.8 percent in September, reaching its lowest level since President Barack Obama took office. The data improved the outlook for the US economy, which is the main destination of Mexican exports.
In Brazil, however, the real lost 0.4 percent to 2.0248 per dollar after the central bank intervened with the sale of reverse currency swaps, derivative contracts designed to weaken the currency. It was the firstswap sale since September 17, when the central bank intervened in the market to offset the impact of the US Federal Reserve's stimulus policies.
Brazilian policy makers have pledged to use all the instruments available to keep the currency at a level that benefits exporters. For now, that level seems to be 2 reais per dollar. "The central bank intervened because the real gained past that level of 2.02, triggering the alarm. The central bank has made it clear that it will not allow the currency to strengthen past 2 per dollar," said Jaime Ferreira, head of foreign exchange at Intercam brokerage in Sao Paulo.