Wires

EMERGING MARKETS-Latam FX set to log first weekly loss in three as stimulus cheer fades

Sruthi Shankar

cheer fades@ (Updates with weekly loss; updates prices) Sept 20 (Reuters) - An index of Latin American currencies fell on Friday, set for its first weekly loss in three, as optimism over a fresh round of stimulus for emerging economies was offset by doubts about progress in U.S.-China trade talks. MSCI's index of Latin American currencies fell 0.4% with Brazil's real hovering at two-week lows. The real was on course to lose nearly 2%, in part after Brazil's central bank cut its interest rate to a record low on Wednesday and signaled room for further easing. Currencies in the region have been hit by geopolitical worries this week following attacks on Saudi Arabia's key oil facilities, while the U.S. Federal Reserve's mixed signals about further interest rate cuts dampened the appetite for risky assets. The Colombian peso dropped nearly a percent, leading losses in the region ahead of Colombia's central bank meeting on Monday. A large majority of analysts expect borrowing costs to be on hold at 4.25% for the rest of the year. "With the recent newsflow having been relatively strong on the activity side (and benign on the inflation side), we do not expect a more dovish tone yet," Citi analysts wrote in a note. On the trade front, a Chinese delegation canceled planned visits to two U.S. farm states after the United States lifted tariffs overnight on over 400 Chinese products. China cut its new one-year benchmark lending rate for the second month in a row and India's government announced deep cuts in corporate taxes to revive flagging growth, both aiding risk sentiment earlier in the day. The broader Latin American currencies index was set to log losses of about 1.8% for the week, while its equities counterpart was down 0.5% on the week. The Bovespa, however, rose 0.3%, led by a 7.2% jump in shares of petrochemical company Braskem SA after a report that Brazilian conglomerate Odebrecht SA had hired the investment banking unit of Lazard to sell its stake in Braskem.

Sao Paulo banks, hit by expectations of lower interest rates, recovered from sharp falls on Thursday. The Argentine peso and the Merval stock index dropped, while bonds rose after the government submitted a debt renegotiation framework bill to Congress on Thursday, lending some clarity to how Argentina will respond to its latest financial crisis. Stock markets in Chile were shut for a public holiday.

Latin American stock indexes and currencies at 1900 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1020.23 0.36MSCI LatAm 2691.74 -0.07Brazil Bovespa 104680.40 0.33Mexico IPC 43509.35 1.14Chile IPSA 0.00 0Argentina MerVal 30007.17 -1.339Colombia IGBC 12912.67 -0.4Currencies Latest Daily %

change

Brazil real 4.1583 0.09Mexico peso 19.4608 -0.05Chile peso 713.55 0.00Colombia peso 3414.9 -0.98Peru sol 3.358 -0.12Argentina peso (interbank) 56.6600 -0.14

(Reporting by Sruthi Shankar in Bengaluru Editing by Leslie Adler)