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Bonds News

EMERGING MARKETS-Latam FX weaken as dollar firms, Chile's peso at one-month low

 (Updates to close)
    By Shreyashi Sanyal and Susan Mathew
    Aug 10 (Reuters) - Chile's peso hit an one-month low and led
declines among Latin American currencies on Monday, while most
regional stocks rose amid hopes of more global stimulus and
upbeat China data.
    Chile's peso slid 1.9% after posting its worst week
since 2011 on Friday.
    "With most of the pension fund related inflows behind us, we
see the Chilean peso continuing its mean reversion back to fair
value, underperforming peers such as the Colombian and the
Mexican pesos in the short run," said FX strategists at JP
Morgan. 
    Late last month, Chilean President Sebastian Pinera signed
into law a plan to allow citizens to withdraw 10% of their
pensions savings in an attempt to help millions of its citizens
who lost jobs due to the coronavirus pandemic. More than 3
million Chileans withdrew a portion of their pensions when the
law went into effect shortly after.
    The move had seen the currency hit its highest level since
early January and post its best monthly gain ever in July.  
    MSCI's index of Latam currencies fell to its
lowest in four weeks on Monday as investor focus on the U.S.
fiscal aid package saw the dollar gain against most rivals.

    Brazil's real gave up early gains to trade 0.9%
lower, continuing the recent weakness following the central
bank's move to cut its benchmark lending rate to an all-time low
last week. 
    Worries around Sino-U.S. ties also persisted, but data on
Monday showing signs of improvement in China's factory activity
helped bring focus back to hopes of a post-pandemic economic
rebound. China is one of the biggest importers of agricultural
commodities and metals from Latam.
    Market participants are hoping for a pickup in Latam
currencies in the second half of the year on higher commodity
prices. 
    Mexico's peso fell half a percent as investors braced
for a likely interest rate cut by the central bank on Wednesday
to the lowest level in four years.
    The Argentine peso edged lower. A central bank
survey on Friday predicted a 12.5% contraction ​​in 2020.

    Argentina is set to start talks with the International
Monetary Fund in the coming weeks aimed at a new program to
replace a defunct $57 billion standby lending deal inked in
2018.
    Among stocks, Mexico's Ipc index led gains, up 0.7%.
It had hit seven-week highs in the session before paring some
gains. 
    
    Key Latin American stock indexes and currencies at 1927 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1085.50    -0.35
                                   
 MSCI LatAm               2006.60     0.02
                                   
 Brazil Bovespa         103277.15     0.49
                                   
 Mexico IPC              38257.28     0.66
                                   
 Chile IPSA               3987.97    -0.02
                                   
 Argentina MerVal        52270.62   -0.106
                                   
 Colombia COLCAP          1145.60      0.3
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.4583    -0.86
                                   
 Mexico peso              22.4660    -0.48
                                   
 Chile peso                 802.6    -1.88
                                   
 Colombia peso            3765.54    -0.67
                                   
 Peru sol                  3.5598    -0.22
                                   
 Argentina peso           72.9400    -0.23
 (interbank)                       
                                   
 
 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Dan
Grebler and Jonathan Oatis)
  
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