Argentina, Brazil: Latin America Bond and Currency Preview

By Lester Pimentel

Sept. 19 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous day's session.

Argentina: The economy expanded 7.5 percent in the second quarter from a year earlier, the National Statistics Institute said in a statement in Buenos Aires yesterday.

The economy grew 2.1 percent from the first quarter, according to the institute.

The peso fell 0.5 percent to 3.1186 per dollar.

The yield on Argentina's inflation-linked peso bonds due in February 2033 fell 66 basis points, or 0.66 percentage point, to 11.38 percent, according to Citigroup Inc.'s local unit.

Brazil: The central bank plans to sell U.S. dollars in the currency market for the first time since February 2003, seeking to inject liquidity amid a global credit crunch that sent the real to a one-year low.

Banco Central do Brasil President Henrique Meirelles said yesterday that the action will also include purchases of dollar futures contracts.

The real fell 0.4 percent to 1.8965 per dollar.

The yield on the zero-coupon, real-denominated bond due in January 2010 rose 45 basis points to 15.39 percent, according to Banco Votorantim.

Mexico: The government may reduce its estimate for the price of oil in next year's budget by as much as $4 a barrel after crude slumped to a seven-month low this week, Deputy Finance Minister Alejandro Werner told lawmakers yesterday.

The government's budget proposal sent to legislators on Sept. 8 assumes Mexican oil exports, which typically trade below benchmark crude futures, will sell for $80.30 a barrel in 2009. The government may cut the estimate to ``a range that would be three of four dollars below'' the previous estimate, Werner said today in response to a question from a lower-house legislator.

The peso was little changed at 10.7509 per dollar.

The yield on the 10 percent bond due December 2024 rose 12 basis points to 8.87 percent. The bond's price fell 1.08 centavos to 109.67 centavos per peso, according to Banco Santander SA.

To contact the reporter on this story: Lester Pimentel in New York at lpimentel1@bloomberg.net