August 30, 2019 / 8:03 PM / 17 days ago

EMERGING MARKETS-Argentine peso logs worst month in history, Latam stocks rise

 (Updates prices; adds milestones and Fitch downgrade; changes
quote)
    By Agamoni Ghosh
    Aug 30 (Reuters) - Argentina's peso slumped on Friday,
underperforming the broader Latin American markets and recording
its worst monthly performance ever, after ratings agency
Standard & Poor's announced it was slashing Argentina's
long-term credit rating to "junk."
    The ratings action follows the government's announcement to
"re-profile" some $100 billion in debt earlier in the week,
sinking Argentine bonds and igniting worries of a full-blown
debt crisis for Latin America's third-largest economy.

    Fitch downgraded Argentina to "RD" status - restricted
default - late on Friday, indicating selective payment default
on a specific class or currency of debt.
 
   "While the government's plans could alleviate some of the
short-term liquidity pressures, implementation risks are high
and further underscore the lack of policy tools to restore
market stability," Goldman Sachs analysts said in a note. 
    The peso fell nearly 3% on the day and logged its
worst month ever, down 26.3%, surpassing a plunge of 25.8%
during the August 2018 monetary crisis.
    The carnage in Argentine markets started after
business-friendly President Mauricio Macri suffered a thumping
defeat in primaries at the hands of Alberto Fernandez, stoking
fears that the return of a leftist government could herald a new
era of interventionist policies. 
    Argentina's MerVal stock index maintained enough
liquidity to rise nearly 4% on Friday, helped by exporters that
benefit from a weaker currency, but has shed nearly 40% through
the month. 
    The rest of the Latin American markets took comfort from
U.S.-China trade hopes, with stocks rising
nearly 2%. 
    Sao Paulo-traded stocks climbed 0.8%, while the real
 gained 1%. August has been the currency's weakest month
in four years, exacerbated by market positioning, aggressive
bets on lower interest rates and the crisis in neighboring
Argentina. 
    Chile's peso dipped marginally, ending the month over
2% lower as falling copper prices have taken a toll on the
world's top producer of the red metal.
    Colombia's peso fell 0.2% ahead of the central bank's
monetary policy decision. Analysts in a Reuters poll in July
indicated policymakers will likely hold borrowing costs to boost
slow growth.
    Markets in Peru were shut for a local holiday. 

 Key Latin American stock indexes and currencies at 1940 GMT

 Stock indexes                        daily %
                             Latest    change
 MSCI Emerging Markets        983.99     1.43
                                      
 MSCI LatAm                  2598.21     1.68
                                      
 Brazil Bovespa            101362.18     0.83
                                      
 Mexico IPC                 42440.99     1.46
                                      
 Chile IPSA                  4791.96     2.13
                                      
 Argentina MerVal           25187.14        5
                                      
 Colombia IGBC              12564.26     0.56
                                      
                                             
 Currencies                           daily %
                                       change
                              Latest  
 Brazil real                  4.1364     0.81
                                      
 Mexico peso                 20.0279     0.52
                                      
 Chile peso                    721.5    -0.17
                                      
 Colombia peso               3439.65    -0.11
 Peru sol                          -        -
                                      
 Argentina peso              59.5000    -2.69
 (interbank)                          
                                      
 

 (Reporting by Agamoni Ghosh in Bengaluru
Editing by Leslie Adler)
  
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