August 30, 2018 / 8:26 PM / a month ago

EMERGING MARKETS-Argentine peso plummets further, even after rate hike

 (Updates prices)
    By Bruno Federowski
    BRASILIA, Aug 30 (Reuters) - The Argentine peso closed down
13.12 percent on Thursday even after bouncing off its session
low when the central bank boosted  interest rates, and the
latest day of the currency's sell-off drove widespread losses
across emerging market assets.
    The bank lifted rates to 60 percent from 45 percent in a bid
to control inflation running at more than 31 percent as the
currency reaches all-time lows on a daily basis. 
    The moves came a day after the International Monetary Fund
called for stronger monetary and fiscal policies in response to
the meltdown of the peso, which has lost 52.2 percent of its
value against the greenback so far this year.
    Despite signing a $50 billion standby financing deal with
the IMF earlier this year, President Mauricio Macri is
struggling to convince the markets that he can spur economic
growth while he cuts fiscal deficits and combats inflation.
    The peso fell as much as 15.6 percent on Thursday to a
record low, by far the largest decliner amid weaker Latin
American currencies. Still, the benchmark Merval stock index
 rose 3.63 percent, driven by export-oriented firms that 
would benefit from a lower peso.
    The Brazilian real was another substantial decliner
as it also suffered the effect of growing concerns over the
October presidential election.
    A string of voter intention polls have shown business
favorite Geraldo Alckmin stuck in the single-digits. Jailed
former President Luiz Inácio Lula da Silva has consistently led
the ballot, followed by far-right lawmaker Jair Bolsonaro.
    Mexico's peso weakened slightly as talks continued to
renegotiate a trilateral North American Free Trade Agreement,
with Mexico, the United States and Canada targeting a Friday
deadline set by U.S. President Donald Trump. 
    
    Key Latin American stock indexes and currencies at 1917 GMT:
   

 Stock indexes       Latest         Daily % change  YTD % change
                                                    
 MSCI Emerging             1057.10           -1.25         -7.59
 Markets                                            
 MSCI LatAm                2446.98           -2.54        -11.23
                                                    
 Brazil Bovespa           76609.28           -2.27          0.27
                                                    
 Mexico IPC               49584.99            -1.2          0.47
                                                    
 Argentina MerVal         26320.25            3.63        -12.46
                                                    
 Colombia IGBC            12241.46           -0.01          7.66
                                                    
 Venezuela IBC           325456.34           -0.61      25665.66
                                                    
                                                                
 Currencies          Latest         Daily % change  YTD % change
                                                    
 Brazil real                4.1657           -1.25        -20.46
                                                    
 Mexico peso               19.1180           -0.84          3.04
                                                    
 Chile peso                  679.8           -1.84         -9.58
                                                    
 Colombia peso             3031.25           -1.09         -1.62
                                                    
 Peru sol                    3.293            0.00         -1.70
                                                    
 Argentina peso            37.6000           -9.31        -50.53
 (interbank)                                        
                                                    
 Argentina peso                 39          -12.44        -50.69
 (parallel)                                         
                                                    
        

 (Reporting by Bruno Federowski and Daina Beth Solomon; Editing
by David Gregorio and Dan Grebler)
  
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