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EMERGING MARKETS-Mexican peso strengthens as c.bank keeps rate on hold

    * Mexican peso climbs as Banxico stands pat on rates
    * EM currencies under pressure from strong dollar

 (Updates with Banxico rate decision, comment; updates prices)
    By Medha Singh and Susan Mathew
    March 25 (Reuters) - Mexico's peso strengthened further
against the dollar on Thursday after the central bank left its
key rate on hold, while Latin American stocks were weighed down
by worries over a resurgence in the pandemic.
    The peso rose 1.4% to trade at 20.65 to the dollar,
on pace to snap a five-day losing streak. Most other currencies
in the region were pressured by a strong dollar.
    Mexico's central bank (Banxico) kept its key interest rate
steady at 4.0%, saying that in a highly uncertain environment,
the risks for inflation, economic activity and financial markets
pose major challenges for monetary policy.
    "The market was pretty split going into the meeting and the
fact that the decision was unanimous means we are probably now
at the end of the easing cycle and the bank would hold rates at
4% going forward," said Christian Lawrence, senior market
strategist at Rabobank in New York.
    The bank cut rates by 25 bps to 4% in February, flagging
uncertainty over the outlook. 
    Banxico's move followed a decision by South Africa's central
bank earlier in the day to keep its policy level unchanged,
bucking the trend of emerging markets raising borrowing costs.

    Policy makers in Brazil, Russia and Turkey delivered
cumulative rate increases 300 basis points last week.
    A basket of Latin American currencies and
stocks have hit two-week lows as a new wave of
COVID-19 sweeps through the region.
    Chilean health officials extended a lockdown across the
capital Santiago even as the South American nation continues to
plow ahead with the world's fastest per capita vaccination
campaign. Peru set a record high of daily caseloads on Thursday.

    Brazil's real, one of the worst performing EM
currencies year-to date, fell another 0.8%. The country's
central bank trimmed its economic growth outlook for this year
to 3.6% from 3.8%, citing "above-usual uncertainty" over a
recovery amid the COVID-19 pandemic. 
    Inflation in the country rose to new multi-year highs in the
month to mid-March, data showed.
    Meanwhile, the stocks in Latin America's largest economy
 bounced off two-week lows, helped by upbeat news in the
utility sector.     
    State power utility Eletrobras was up 3.8% after
the Brazilian government appointed lawyer and economist Rodrigo
Limp Nascimento as CEO, to replace Wilson Ferreira, who quit in
January over what he called a lack of political support in
Congress for privatizing the company.
    Chile's peso extended losses to a fourth day as
copper prices fell.
    
    
    Key Latin American stock indexes and currencies: 
    
 Stock indexes                                 daily % change
                                    Latest     
 MSCI Emerging Markets                1288.28           -0.78
 MSCI LatAm                           2248.66           -0.24
 Brazil Bovespa                     113775.55            1.53
 Mexico IPC                          46665.63           -0.08
 Chile IPSA                           4767.71           -1.54
 Argentina MerVal                    46978.60          -3.367
 Colombia COLCAP                      1320.55           -0.36 Currencies                                    daily % change
                                               
                                       Latest  
 Brazil real                           5.6661           -0.51
 Mexico peso                          20.6660            1.23
 Chile peso                             724.9            0.36
 Colombia peso                         3666.1           -0.53
 Peru sol                              3.7338           -0.29
 Argentina peso (interbank)           91.7700           -0.14
                                               
 
    
 (Reporting by Medha Singh and Susan Mathew in Bengaluru;
Editing by Kirsten Donovan and Sonya Hepinstall)
  
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