* Argentine peso at 74 to the dollar * Brazil real hits highest level in two weeks * Mexico's peso lags Latam peers for the week (Updates prices throughout; adds comments, bullets) By Susan Mathew and Shreyashi Sanyal Aug 28 (Reuters) - Argentina's peso slipped to new lows on Friday, when bondholders are to decide whether to accept the country's $65 billion restructuring proposal, with the Brazilian real leading a surge among Latin American currencies against a weakening dollar. Argentina's heavily controlled peso hit 74 to the dollar. After four months of tense debt talks, multiple deadline extensions and amendments, the main three creditor committees holding a large chunk of the bonds backed a deal earlier this month, bolstering confidence that the government will get the required level of support to allow a full deal to go ahead. A deal is key to pulling Argentina out of default and reviving a country already in its third straight year of recession. Barring any unexpected hiccups, Argentina's international sovereign bonds will be restructured, said Nikhil Sanghani, assistant economist at Capital Economics. "Now the government wants to tackle the debts owed to its historic 'frenemy': the International Monetary Fund. But a deal on this front won't come quickly," Sanghani said. As the dollar nursed losses after the U.S. Federal Reserve signaled lower interest rates for a longer duration, riskier currencies rallied as the rate differential makes higher-yielding emerging market currencies more attractive. Brazil's real jumped 3% to two-week highs after the country's National Monetary Council approved the immediate transfer of 325 billion reais ($58.3 billion) to the Treasury from the central bank to ease debt liquidity strains. Amid concerns that Brazil will overshoot its spending cap, local reports said Brazil's President Jair Bolsonaro wants to divert 6.5 billion reais ($1.2 billion) of the federal budget into the "Pro-Brazil" infrastructure and regional development program, more than the economy ministry had expected. Investors were also eyeing the Brazilian government's plan to temporarily remove import tariffs on rice, corn and soybeans. Brazil's partners in South America's Mercosur trade bloc voiced concerns that they will lose out, mainly to the United States. Mexico's peso surged 1.2%, and looked to post its biggest one-day gain in three weeks, still lagging major Latin American units for the week. Chile's peso pared some gains after data showed that amid coronavirus lockdowns the country's pace of unemployment rose the most in this decade. Ahead of a central bank interest rate decision on Monday, Colombia's peso was on track to post its best session in almost one month. A Reuters poll indicated the central bank will deliver its last cut in this cycle, by another 25 basis points to a historic low of 2%. Key Latin American stock indexes and currencies at 1932 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1122.97 0.51 MSCI LatAm 2008.68 3.68 Brazil Bovespa 102049.05 1.42 Mexico IPC 37854.33 0.55 Chile IPSA 3872.29 -0.4 Argentina MerVal 46174.05 4.337 Colombia COLCAP 1229.85 0.38 Currencies Latest Daily % change Brazil real 5.4070 3.16 Mexico peso 21.7539 1.75 Chile peso 778.4 0.84 Colombia peso 3740.92 1.97 Peru sol 3.5327 0.85 Argentina peso (interbank) 73.9900 -0.07 Argentina peso (parallel) 133 3.76 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; editing by Jonathan Oatis)
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