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EMERGING MARKETS-Mexican peso up among muted Latam FX; currencies set for weekly gains

    * Mexican peso up after retail sales rise for fourth month  
    * Brazilian real pressured by weak consumer confidence data
    * Morgan Stanley bullish on emerging FX and sovereign credit
    * EM stocks see biggest inflows in 6 weeks - BofA flows data

    By Shreyashi Sanyal
    Oct 23 (Reuters) - The Mexican peso rose after a positive
reading on retail sales on Friday as most Latin American
currencies traded in tight ranges, although major units in the
regions were still set to end the week higher. 
    The peso rose 0.3% against the dollar after data
showed retail sales rose in August by 2.5% from July, the fourth
monthly increase in a row, as consumer spending continues to
recover from the effects of the coronavirus pandemic.
    Mexico's currency has fared somewhat better than its Latin
American peers due to the country's close trade ties with the
United States, which is now showing signs of a rebound but the
peso still remains sensitive to news around the U.S.
presidential elections. 
    The Brazilian real fell after a survey showed
consumer confidence fell in October for the first time in six
months, suggesting that the economy's recovery may be losing
steam. The real is still set for a weekly gain of 0.9%.

    Emerging markets FX strategists at Citigroup said October's
consumer confidence is still below pre-COVID-19 level and now
expect fourth quarter GDP growth to show a significant
deceleration following the robust expansion in the third
    Morgan Stanley said on Friday it was time to ramp up
exposure to emerging market currencies and hard-currency
sovereign debt, with a shift of focus to the vaccine trade in
the wake of the U.S. election potentially giving developing
assets a boost.
    Emerging market stocks saw inflows of $2.7 billion, the
largest in six weeks, while emerging market debt saw strong
inflows of $2.2 billion, Bank of America said in a note on
Friday, citing EPFR data. Investors piled in to EM equities and
bonds in the week to Oct. 21.
    The International Monetary Fund last week revised up its
forecast for the global economy but warned that the outlook was
worsening for many emerging markets.
    The pesos of Chile and Colombia outperformed
peers for the week, as investors remained hopeful of a recovery
in both regions. 
    Colombia has swapped 2 trillion pesos ($529.5 million) of
internal public debt, reducing expiries due in the next two
years and avoiding increased indebtedness, the finance ministry
    Argentina's peso weakened. Argentine bondholder
groups slammed the government on Thursday over economic policies
they said were undermining investor confidence in the country,
which emerged from a sovereign default in September after a $65
billion restructuring.
    Among other emerging markets currencies, Russia rouble
 strengthened 0.8% after the country's central bank left
interest rates unchanged.     
    Key Latin American stock indexes and currencies at 1357 GMT:
            Stock indexes                    Latest   Daily %
 MSCI Emerging Markets                       1134.33    -0.19
 MSCI LatAm                                  1973.42    -0.39
 Brazil Bovespa                            101913.80        0
 Mexico IPC                                 38657.88     0.01
 Chile IPSA                                  3811.05    -0.01
 Argentina MerVal                               0.00        0
 Colombia COLCAP                             1177.89        0
               Currencies                    Latest   Daily %
 Brazil real                                  5.6148    -0.40
 Mexico peso                                 20.8969     0.24
 Chile peso                                    776.7     0.28
 Colombia peso                                  3775     0.19
 Peru sol                                     3.6007     0.03
 Argentina peso (interbank)                  78.0300     0.05
 Argentina peso (parallel)                       186    -1.61
 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Chizu Nomiyama)