EMERGING MARKETS-Brazil leads Latam currencies down on Fed fears

Reuters

RIO DE JANEIRO, Oct 31 (Reuters) - Brazil's real weakened by

the most in over two months on Thursday, leading Latin American

currencies down as recent U.S. economic data fueled fears that

the Federal Reserve may start winding down its stimulus program

later this year.

The Brazilian real shed nearly 2 percent, as investors

betting on the currency's weakening gained the upper hand during

the settlement of an official month-end exchange rate known as

Ptax, a reference for contracts in Brazil.

Concerns about an early withdrawal of U.S. stimulus gained

steam on Wednesday after some traders interpreted the Fed's

latest policy statement, which said downside risks to the

economy had lessened, as slightly more hawkish.

Thursday's economic data, including a surprisingly strong

report on U.S. Midwest business activity, added to concerns.

The Fed's bond-buying program currently injects $85 billion

a month into the U.S. economy, and some of those funds often

make their way into higher-yielding emerging markets.

* The Brazilian real lost 1.93 percent to

2.2336 per dollar, its biggest decline since Aug. 21 and the

weakest level since late September.

* A report showed Brazil's primary budget deficit swelled to

its biggest in nearly five years in September. Analysts saw the

data as a sign of heightened government spending that could fuel

inflation and force the central bank to further tighten monetary

policy.

* The Mexican peso slid 0.73 percent to 13.019 per

dollar, beyond the 13 per dollar level that has proven to be a

key resistance level during the past three weeks.

Latin America FX prices at 2113 GMT:

Currencies daily % YTD %

change change

Latest

Brazil real 2.2336 -1.93 -8.67

Mexico peso 13.019 -0.73 -1.19

Chile peso 506.9000 0.36 -5.56

Colombia peso 1892.3500 -0.49 -6.68

Peru sol 2.7720 -0.51 -7.97

Argentina peso (interbank) 5.9100 -0.08 -16.88

Argentina peso (parallel) 9.8800 0.51 -31.38

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