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MEXICO CITY (Reuters)
- The Mexican peso weakened sharply in early trade Wednesday as the dollar
climbed by nearly an entire peso in value after Brazil effectively devalued
its real currency.
 The peso slipped 99.5 centavos
to 11.02/11.13 per dollar from its Tuesday close of 10.125/10.135.
"Brazil widened its bands
and the market is very pessimistic," one trader said. "There is a very
dark panorama over emerging markets. I hope the lowest it goes is 11.30."
The peso weakening represents
a fall of 8.94 percent -- a new historic low.
Brazil's currency, the real,
effectively gave up its struggle against devaluation Wednesday, falling
8.59 percent to trade at 1.300 and 1.315 per dollar at the start.
That happened after the Brazilian
central bank announced
a new wider "maxi-band" to replace the tight mini-band in which the currency
had previously traded. The real had closed at 1.2110 to the dollar Tuesday.
Colombia's peso also plunged
to a new all-time low against the dollar, falling 51 pesos on the dollar
to 1,605.
Dealers in Mexico said the
country's floating currency was once again taking the hit as speculators
sold to buy dollars.
"The Mexican peso is once
again the victim because speculators are taking advantage of the liquidity
in the foreign exchange market," said Juan Pablo Chavez, economist with
IDEA in New York.
Dealers saw Mexican stock
markets also taking a severe hit due to nervous selling by investors fleeing
emerging markets.
The leading IPC Mexican stock
index fell 84.41 points, or 2.44 percent, to 3,375.23 at the opening bell,
immediately shattering support traders had hoped for at the 3,400 level.
Brazilian stocks were halted
in the first minutes of trading after a 10.23-percent plunge activated
electronic circuit breakers.  |
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