September 28, 2018 / 10:55 PM / 2 months ago

EMERGING MARKETS-Argentina peso sinks on IMF deal doubts, NAFTA boosts Mexico peso

    BUENOS AIRES/SAO PAULO, Sept 28 (Reuters) - Argentina's
currency sank on Friday in panic a new monetary policy framework
agreed between the government and the International Monetary
Fund is too rigid, while Mexico's peso jumped as the market
awaited details of the new U.S.-Mexico NAFTA trade deal.
    The IMF agreed on Wednesday to increase its three-year
lending program with Argentina by $7 billion to $57 billion
total, on the condition the central bank halt full-scale
interventions to support the ailing peso.
    That will mark a significant departure from current policy.
The central bank has spent nearly $16 billion in reserves this
year in a failed attempt to prop up the currency.
    "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 nearly 4 percent against the dollar.
    Mexico's peso currency meanwhile strengthened to a one-month
high versus the dollar as market participants awaited the
updated U.S.-Mexico North American Free Trade Agreement (NAFTA),
expected to be published Friday evening.
    The release of the text increases pressure on Canada to join
its partners in revamping NAFTA, while Mexico's president-elect
said he would insist on a trilateral pact.
    The peso gained 0.37 percent.
    Elsewhere across the region, equities and currency markets
were generally mixed.
    The biggest equities index mover was Brazil's benchmark
Bovespa, which fell nearly 1 percent.
    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.

Key Latin American stock indexes and currencies at 1959 GMT:    
 Stock indexes               Latest          Daily   YTD pct
                                               pct    change
                                            change  
 MSCI Emerging Markets          1,047.15     -0.39     -9.25
                                                    
 MSCI LatAm                     2,559.11     -1.24     -8.38
 Brazil Bovespa                79,254.20     -0.93      3.73
 Mexico IPC                    49,486.84     -0.32      0.27
 Argentina MerVal              33,375.37     -0.82     11.01
 Colombia IGBC                 12,429.46      0.34      9.31
 Venezuela IBC                342,658.00      6.78  27027.48
                                                            
 Currencies                       Latest     Daily   YTD pct
                                               pct    change
                                            change  
 Brazil real                      4.0358     -1.05    -17.90
 Mexico peso                     18.7160      0.37      5.25
 Chile peso                       657.61      0.29     -6.53
 Colombia peso                   2,959.8      0.89      0.75
 Peru sol                          3.304     -0.15     -2.03
 Argentina peso (interbank)      41.2500     -3.76    -54.91
                                                    
 Argentina peso (parallel)         39.25     -1.91    -51.01
                                                    
 
 (Reporting by Walter Bianchi and Gram Slattery
Additional reporting by Anthony Esposito in Mexico City
Editing by Bill Trott)
  
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