Aug. 25 (Bloomberg) -- Brazil's currency fell, reversing initial gains, as a more than 0.5 percent jump in the real the past two days prompted some investors to buy dollars.

The real fell as much as 0.3 percent after rising by that amount earlier. With some investors expecting the real to fall to about 3.20 to the dollar by yearend as lower interest rates make Brazilian securities less attractive, gains in the real make buying dollars more attractive, said Hideaki Iha a trader with Sao Paulo-based Corretora Sousa Barros Cambio e Titulos SA.

``If the real rises a bit, it makes good sense to buy dollars, and we'll see banks boost their dollar positions,'' Iha said.

The real fell 0.2 percent at 11:35 a.m. New York time to 2.9920 reais to the dollar from 2.9865 reais Friday. The real has gained 18 percent this year, making it the best performing currency against the dollar of the 16 most-traded currencies against the dollar.

Argentina's peso rose while the Mexican, Chilean and Colombian pesos fell.

Brazil's benchmark 8 percent bond maturing in 2014 was unchanged at 89.75 cents on the dollar to yield 10.62 percent.

Agentina's peso rose 0.5 percent, trimming some of last week's losses.

Argentina's peso fell 2 percent last week to close at 2.9500 per U.S. dollar on Friday, its lowest close since Aug. 4. The peso fell to as low as 2.9812 on Friday.

IMF Loan

``After the peso hit 2.98 per U.S. dollar on Friday, we saw a large amount of sellers come out and so we were expecting this rise today,'' said Carlos Lizer, head of trading at the Puente Hermanos exchange house in Buenos Aires.

Lizer said the peso should stay above 2.93 per U.S. dollar in coming days on concerns about negotiations between Argentina and the International Monetary Fund for a new loan accord that would defer payments. Argentina has a $2.9 billion payment due Sept. 9.

Mexico's peso fell 0.2 percent to 10.8650 to the dollar. Chile's peso fell 0.04 percent to 697.35 to the dollar. Colombia's peso fell 0.1 percent to 2843.70 to the dollar.