SAO PAULO/BUENOS AIRES, May 4 (Reuters) - Argentina's peso strengthened sharply on Friday, gaining over 5 percent against the dollar after the central bank hiked the benchmark interest rate to 40 percent in a dramatic bid to shore up the currency. On Thursday, the peso plunged 7.8 percent even as the central bank hiked the rate by 300 basis points, its second surprise hike in less than a week. After that move failed to calm markets, the bank boosted the rate again on Friday by 675 basis points. The central bank has hiked the benchmark rate some 1,275 basis points since April 27.
That appeared to do the trick for now, as the peso traded up 5.5 percent at 21.8 pesos to the dollar in the late morning. Still, traders say the peso's recovery remained fragile. "I think it is a good play by the government, trying to amend for some mistakes in the past," said Gabriel Zelpo, chief economist at Buenos Aires consultancy Elypsis. "However, even as I am optimistic about the result, it must be followed by a calm international scenario." Elsewhere in the region, currency and equities markets were mixed as eyes were fixed on the ongoing tariff talks between the United States and China. The Mexican peso was the biggest loser in the region, falling 1 percent against the dollar after the U.S. Labor Department reported job growth increased less than expected in April and the unemployment rate dropped to a level last seen in December 2000 as some jobless Americans left the labor force. The report stoked bets of constrained monetary policy. Brazil's benchmark Bovespa index, which ticked up 0.3 percent, was aided by Lojas Renner SA, the country's largest apparel retailer. Its shares rose nearly 5 percent after reporting quarterly results that topped estimates. That accounted for about one-quarter of the index's rise on Friday. In Colombia, both the peso currency and IGBC equities index, which rose 0.58 percent and 0.6 percent, respectively, benefited from solid oil prices, which rose on Friday as the market awaits news from Washington on possible new sanctions on Iran.
Key Latin American stock indexes and currencies at 1453 GMT:
Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1135,17 -0,24 -1,78 MSCI LatAm 2864,53 0,83 0,46 Brazil Bovespa 83398,97 0,13 9,16 Mexico IPC 47004,01 -0,19 -4,76 Chile IPSA 5646,01 0,1 1,46 Chile IGPA 28441,97 0,1 1,65 Argentina MerVal 29784,55 0,95 -0,93 Colombia IGBC 12447,34 0,76 9,47 Venezuela IBC 21216,78 -3,46 1579,69 Currencies daily % YTD % change change
Brazil real 3,5228 0,18 -5,95 Mexico peso 19,1630 -0,55 2,80 Chile peso 619,95 -0,30 -0,85 Colombia peso 2841,21 0,58 4,96 Peru sol 3,267 0,15 -0,92 Argentina peso 21,8000 5,50 -14,68
Argentina peso 21,45 -1,63 -10,35
(Reporting by Gram Slattery and Hugh Bronstein Editing by Jeffrey Benkoe)