September 28, 2018 / 2:30 PM / in 3 months

EMERGING MARKETS-Argentine peso sinks on IMF deal skepticism

    BUENOS AIRES/SAO PAULO, Sept 28 (Reuters) - Argentina's peso
currency dropped almost 3 percent in morning trade on Friday
amid panic that a new monetary policy framework agreed upon
between the International Monetary Fund and the Argentine
government is too rigid.
    On Wednesday, after months of talks, the IMF agreed to
increase its three-year lending program with Argentina by $7
billion to $57 billion total on the condition that the central
bank halt full-scale interventions to support the ailing peso.

    That will mark a significant departure from current policy,
as the central bank has spent nearly $16 billion in reserves
this year in a failed attempt to prop up the currency.
    "Traders understand the new IMF agreement is great news for
fiscal policy, but our first impression is that the new monetary
policy is extremely rigid and creates great risks for economic
activity, especially if annual inflation surpasses 40 percent in
September," a report from SBS consultancy said.
    The peso fell some 4 percent against the dollar in
morning trade.
    Across the region, equities and currency markets were
generally mixed.
    The biggest equities index mover was Brazil's benchmark
Bovespa, which fell more than 1 percent at opening but
pared losses to 0.69 percent later in the morning.
    Traders were jittery before the release of a key election
poll just over the week before the first-round of a divisive
presidential election.
    Among top gainers were highway operators CCR SA
and Ecorodovias Infraestrutura e Logistica SA, as
traders bought back in after the two firms became ensnared in a
major corruption probe earlier in the week.
    Shares in CCR climbed 1.7 percent in morning trade, while
shares in Ecorodovias were up 0.7 percent.
    
Key Latin American stock indexes and currencies at 1400 GMT:
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1051.30       0.5     -9.25
                                                  
 MSCI LatAm                    2591.28      2.22     -8.38
                                                  
 Brazil Bovespa               79700.83     -0.37      4.32
                                                  
 Mexico IPC                   49473.23     -0.35      0.24
                                                  
 Argentina MerVal             33651.33         0     11.93
                                                  
 Colombia IGBC                12357.48     -0.24      8.68
                                                  
 Venezuela IBC               323262.22      0.74  25491.95
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.9949     -0.04    -17.06
                                                  
 Mexico peso               18.7345       -0.27        
                                                  
 Chile peso                      660.3     -0.12     -6.91
                                                  
 Colombia peso                 2980.13      0.20      0.06
 Peru sol                        3.295      0.12     -1.76
                                                  
 Argentina peso                40.8500     -2.82    -54.47
 (interbank)                                      
                                                  
 Argentina peso                  38.25      0.00    -49.73
 (parallel)                                       
                                                  
 
 (Reporting by Walter Bianchi and Gram Slattery
Editing by Bill Trott)
  
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