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EMERGING MARKETS-Brazil real hits 2-month low, peso sinks

MEXICO CITY, Nov 5 (Reuters) - Brazil's real slumped to a

2-month low on Tuesday and Mexico's peso sank to its weakest in

more than three weeks on bets that upcoming U.S. economic data

may encourage the Federal Reserve to withdrawal monetary

stimulus soon.

U.S. service sector data on Tuesday showed faster growth

than expected in October, feeding speculation that the Fed may

start winding down its bond-buying program this year.

Latin American currencies have weakened since last week amid

signs of more vigorous U.S. growth. A strong U.S. jobs report

for October on Friday could deepen bets the Fed will move soon.

Fed stimulus has kept yields on U.S. Treasuries low, driving

investors to seek higher returns in emerging markets. Reduction

of the Fed's stimulus is expected to drain much of the tide of

investment that rolled into emerging markets.

* The Brazilian real slid 2 percent to 2.2887

per dollar, its weakest close since Sept. 9.

* Traders speculated that the Brazilian central bank, in an

attempt to cushion the real's losses, could step up its market

intervention by offering to roll over currency swaps that mature

in the beginning of December.

* The Mexican peso lost nearly 1.3 percent to 13.16

per dollar, its weakest level since Oct. 10.

* Higher taxes next year are likely to have little impact on

inflation, which is seen drifting slightly higher to around 3.5

percent next year, central bank chief Agustin Carstens said on


* Tame price pressures are seen allowing Mexico's central

bank to hold its key rate at a record low of 3.5 percent well

into next year in order to support sluggish growth.

Latin America FX prices at 2345 GMT:

Currencies daily % YTD %

change change


Brazil real 2.2887 -1.97 -10.87

Mexico peso 13.16 -1.25 -2.25

Chile peso 515.7000 -0.56 -7.17

Colombia peso 1921.6500 -0.95 -8.10

Peru sol 2.7800 0.00 -8.24

Argentina peso 5.9525 -0.17 -17.47

Argentina peso 9.7900 0.92 -30.75