Emerging markets: Brazil's real sinks near central bank trigger

The Mexican peso also weakened, although a more modest 0.4 percent, after failure by international lenders to agree on emergency aid for Greece drove a bid for safe-haven assets such as the dollar.

The Brazilian real lost 0.66 percent to 2.0944 per dollar, just shy of the ceiling of an informal trading range of 2.0-2.1 per dollar, where it has been stuck since early July.

In the past several months, the central bank has intervened in the market every time the real has neared the edge of that range, keeping the currency at a level considered beneficial to exporters, and at the same time, not too bad for inflation.

But concerns that Brazil's economy is taking too long to recover have increased speculation that this time the government would let the real weaken past the 2.1 per dollar mark. Such adjustment would be minor, however, to minimize inflation pressures.

"Given a history of raising the ranges for the dollar-real exchange rate over time, we imagine that the central bank is not going to defend the 2.10 level," Citigroup's strategists Dirk Willer and Kenneth Lam wrote in a research note.

"Raising the upper end of the ceiling to 2.12 or potentially to 2.15 does seem plausible," they added.

Expectations that the government is about to let the currency

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