Bonds News

EMERGING MARKETS-Latam FX down; Mexican peso trims losses as central bank holds rates

    * Mexico's central bank unexpectedly holds rates steady  
    * Weak oil prices pressure Mexican, Colombian pesos
    * Latam stocks tumble for second day 
    * Peruvian sol falls to fresh 18-year low

 (Updates prices throughout, adds comments)
    By Shreyashi Sanyal
    Nov 12 (Reuters) - The Mexican peso pared back some declines
on Thursday after the Bank of Mexico unexpectedly held interest
rates steady in its latest meeting, while other Latin American
currencies continued to fall by afternoon trading. 
    The peso trimmed some losses after falling nearly 1%
earlier in the session as Banxico, as the Bank of Mexico is
known, kept its benchmark interest rate unchanged at 4.25%
despite expectations of a 25-basis-point cut to 4.0%.

    "The communications accompanying the Mexican central bank's
decision to leave its policy rate unchanged at 4.25% today
suggests that there may still be scope for one more cut in the
easing cycle," said William Jackson, chief emerging markets
economist at Capital Economics. 
    "With the peso rallying and the economy weak, the argument
for more policy support will remain strong."
    The currency is among the best performing Latin American
units this year, having benefited recently from expectations of
better trade ties with the United States after Joe Biden won the
presidential election.
    Mexico's currency and Colombia's peso were also hurt
by weakness in the oil market after the International Energy
Agency raised doubts about a quick post-COVID-19 pickup in
    Brazil's real gave back most of its gains from
earlier in the session even as data showed services activity
rose more than expected in September, suggesting that certain
facets of Latin America's largest economy were picking up from
the pandemic.
    Economy Minister Paulo Guedes said Brazil's economy could
grow as fast as 4% next year, accelerating its recovery from the
depths of the pandemic as job creation and private sector
investment continue to gather pace.
    While regional currencies and stocks benefited from optimism
over coronavirus vaccine news on Monday, uncertainty over the
vaccine's availability, as well as continued signs of the
pandemic's economic impact prompted some unwinding in risk
    The MSCI's index of regional stocks tumbled
3%, while its currencies counterpart fell 1%.  
    Peru's sol fell to another 18-year low as the
country's new Cabinet took shape on Wednesday after the ouster
of centrist President Martín Vizcarra on Monday plunged the
country into turmoil.
    Argentina's central bank said it will raise its benchmark
Leliq interest rate to 38% from the previous level of 36%,
following a recent series of cuts. The bank will also raise the
overnight reverse repo rate and the seven-day reverse repo rate.

    Key Latin American stock indexes and currencies: 
         Stock indexes                  Latest   Daily %
 MSCI Emerging Markets                  1180.72     0.16
 MSCI LatAm                             2047.29    -3.11
 Brazil Bovespa                       102059.70    -2.62
 Mexico IPC                            40276.28    -1.43
 Chile IPSA                             3916.50    -1.58
 Argentina MerVal                      49648.11   -3.474
 Colombia COLCAP                        1202.34    -1.45
             Currencies                 Latest   Daily %
 Brazil real                             5.4772     0.01
 Mexico peso                            20.6497    -0.90
 Chile peso                               759.9    -0.83
 Colombia peso                          3634.27    -0.01
 Peru sol                                3.6397    -0.49
 Argentina peso (interbank)             79.5600    -0.08
 Argentina peso (parallel)                  163    -0.61
 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru;
Editing by Angus MacSwan)