October 1, 2018 / 9:02 PM / 8 months ago

EMERGING MARKETS-Argentina's currency jumps on note sale, Mexico's peso sheds gains

    By Susan Mathew
    Oct 1 (Reuters) - The Argentine peso climbed more than 4 percent on Monday
on the back of a debt sale by the central bank aimed at mopping up excess
liquidity and signs that the International Monetary Fund (IMF) is solidly behind
the inflation-racked country, while the Mexican peso gave up all its trade
deal-driven gains.
    The Argentine peso rose 4.6 percent to close at 39.4 per dollar, more
than making up for a 3.87 percent loss against the greenback on Friday, when
Argentina struck a deal with the IMF to bolster its finances.
    The bank sold about 71.1 billion pesos ($1.78 billion) worth of seven-day
"Leliq" notes, above market expectations of 60 billion pesos.
    "Market participants have been surprised by the level of support that the
IMF has for Argentina. This has led investors to feel more comfortable with
Argentine risk," Daniel Osorio, president of New York-based consultancy Andean
Capital Advisors, said in a telephone interview.
    Nonetheless, the MerVal stock index fell for a fourth straight
session. The losses were led by energy companies, with Argentina-listed shares
of Petrobras down 4.4 percent, and YPF SA sliding 5.1
percent even as crude oil prices rose.
    Meanwhile, the Mexican peso closed little changed, erasing most of
its gains from the start of the session after a U.S.-Canada trade deal over the
weekend salvaged the trinational North America Free Trade Agreement (NAFTA)
without fracturing any of the key supply chains involved.
    While there is no denying that this is a positive development, economists at
Rabobank said in a note to clients explaining the peso's move that the market
was not pricing in a break-up and left their three-month forecast for the
currency unchanged. 
    Mexican stocks held on to earlier gains, with the benchmark IPC index
hitting a one-month high, as auto parts makers got a lift from the trade deal.
    Nemak soared 7.4 percent, while Rassini added 3.4
percent as they may benefit from increasing regional content requirements for
automaking in North America from the trade deal.
    Brazil's real strengthened on the first day of what analysts expect
will be a volatile week during the run-up to the first round of the country's
presidential election this weekend.
    However, a near 30-percent plunge in healthcare insurer Qualicorp
dragged the country's benchmark Bovespa stock index down more than 1
    Qualicorp shares tumbled after it said it would pay its founder and biggest
shareholder 150 million reais ($37.22 million) in return for a pledge not to
sell his shares or compete with it.
    Key Latin American stock indexes and currencies at 2011 GMT:
 Stock indexes               Latest          Daily   YTD pct
                                               pct    change
 MSCI Emerging Markets          1,046.01     -0.18     -9.54
 MSCI LatAm                     2,564.00     -0.49      -8.9
 Brazil Bovespa                78,623.66     -0.91      2.91
 Mexico IPC                    49,873.01      0.75      1.05
 Chile IPSA                     5,298.38      0.28      0.28
 Argentina MerVal              32,673.63     -2.36      8.67
 Colombia IGBC                 12,556.99      0.75     10.43
 Currencies                       Latest     Daily   YTD pct
                                               pct    change
 Brazil real                      4.0231     -0.14    -17.64
 Mexico peso                     18.7163     -0.04      5.25
 Chile peso                          658     -0.06     -6.59
 Colombia peso                  2,999.05     -1.31     -0.57
 Peru sol                          3.307     -0.09     -2.12
 Argentina peso (interbank)      39.4000      4.82    -52.79
 Argentina peso (parallel)         38.25      3.92    -49.73

 (Reporting by Susan Mathew in Bengaluru, additional reporting by Hugh
Bronstein, editing by G Crosse)
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