EMERGING MARKETS-Mexican peso higher after rate cut, Latam FX falls for 9th session

Medha Singh


* Mexican central bank cuts interest rates by 25 bps

* Chile peso hits new low as unrest continues

* Latam stocks pulled higher on gains from Bovespa

(Updates prices, adds Mexico central bank decision, comment) Nov 14 (Reuters) - The Mexican peso reversed course on Thursday to trade higher after Mexico's central bank lowered borrowing costs for the third time this year, while Chile's peso hit fresh record lows despite intervention by its central bank. A divided Banxico cut interest rates by 25 basis points to 7.50%, in line with the consensus forecast of a Reuters poll of analysts published earlier this week, but flagged growth risks for Mexico, Latin America's second largest economy. The peso, which had slid about 1% in the run-up to the central bank decision, moved higher. Two of the bank's five-member board voted to cut rates by 50 basis points. "The easing cycle will continue until next year until the overnight rate is 6.25% by the end of 2020," said Gabriela Soni, chief investment officer for Mexico at UBS Global Wealth Management. "We do, however, recognize that monetary policy could be less effective as uncertainty about the domestic economic policy, increasing violence, and security problems will continue weighing on investment decisions." Mexico narrowly escaped sliding into recession in the first half of 2019, and preliminary figures showed that gross domestic product inched forward by just 0.1% in the third quarter. MSCI's index tracking Latin American currencies eyed its ninth consecutive session of declines as broader risk sentiment took a hit from weak economic data out of major global economies such as China and the Eurozone. Brazil's real and Colombia's peso fell between 0.5% and 0.7%, while the Chilean peso tumbled another 1% to hit a fresh all-time low, despite the central bank injecting $4 billion into the financial system on Thursday to boost liquidity. The country has been hit by weeks of protests that have hurt investor confidence. "Markets were hoping that (intervention) would stabilize the Chilean peso and instead we broke through a key psychological level of 800," said Paresh Upadhyaya, director of currency strategy at Amundi Pioneer Investments. Stocks in the region were pulled slightly higher by heavyweight Brazil's Bovespa. Shares in Via Varejo rose 7% after the retailer said an in-house investigation into alleged accounting irregularities has not uncovered anything so far. Stocks in Chile were up 1.3% but still on track to lose nearly 5% for the week.

Key Latin American stock indexes and currencies at 2024 GMT:

Stock indexes Latest daily % changeMSCI Emerging Markets 1042.20 -0.16MSCI LatAm 2659.50 0.22Brazil Bovespa 106423.97 0.34Mexico IPC 43086.41 -0.03Chile SPIPSA 4498.52 1.96Argentina MerVal 31019.69 -4.085Colombia IGBC 13190.43 -0.4Currencies Latest daily % changeBrazil real 4.1855 -0.38Mexico peso 19.3240 0.13Chile peso 803.8 -1.11Colombia peso 3450 -0.73Peru sol 3.387 0.03Argentina peso (interbank) 59.6950 0.06

(Reporting by Medha Singh and Agamoni Ghosh in Bengaluru; Additional reporting by Kate Duguid in New York, Editing by Rosalba O'Brien)