September 4, 2019 / 2:50 PM / 18 days ago

EMERGING MARKETS-Latam currencies rise, Argentine markets steady on capital controls

    By Agamoni Ghosh
    Sept 4 (Reuters) - Latin American currencies rose on
Wednesday, helped by a softer U.S. dollar and rising oil prices,
while newly imposed capital controls in Argentina helped its
markets steady even as anti-government protests gathered steam
in Buenos Aires. 
    MSCI's index of Latin American currencies
came off their one-year lows to move 0,8% higher as weak
manufacturing data in the U.S. put the greenback on the back
foot.
    Brazil's real and Mexico's peso led gains,
each up nearly 1%, getting an additional boost from higher oil
prices. 
    Chile's peso was only marginally higher,
underperforming its regional peers after the central bank cut
its key interest rate by 50bps on Tuesday as inflation levels
continue to drag for the world's top copper exporter.    
    Latin America's top currencies are, however, poised to
remain weak in coming months as central banks in Brazil and
Mexico keep easing to revive growth, with worries over
Argentina's financial condition adding to a softer trend, a
Reuters poll showed.  
    Sao Paulo-traded stocks rose over 1%, boosted by
Petrobras which rose nearly 3% after Brazil's Senate
approved an amended transfer of rights agreement to settle a
dispute over pre-salt oil fields.
    Indices in Mexico, Chile and Colombia
, all gained between 0.4% and 0.8%.    

    ARGENTINE TURMOIL 
    Argentina's peso held steady, while the Merval index
 moved 2.4% higher as newly-imposed capital controls
helped stabilize haywire markets, even as calls for
anti-government protests gathered steam as the country faces a
deepening financial crisis. 
     Ratings agency Fitch, which had downgraded the country's
sovereign credit ratings to RD (restricted-defaulted), upgraded
it late-Tuesday to its former status CC (strong default
probability).
    A divergence between the official and black market rates of
the currency, however, remained casting doubts on how long the
recovery in the peso could be sustained through such controls.
    "We expect to see further weakness in local assets as the
market preempts the possibility of stricter capital controls,"
said analysts from Morgan Stanley in a note. 
    The controls come after markets reacted sharply to sovereign
debt downgrades by rating agencies after the government
announced its plans to "re-profile" some $100 billion in debt.

  Key Latin American stock indexes and currencies at 1430 GMT
     
 Stock indexes                       daily % change
                          Latest     
 MSCI Emerging Markets       990.89            1.81
                                     
 MSCI LatAm                 2597.95            1.99
                                     
 Brazil Bovespa           100842.41            1.17
                                     
 Mexico IPC                42198.94            0.89
                                     
 Chile IPSA                 4755.35            0.89
                                     
 Argentina MerVal          23649.69            2.41
                                     
 Colombia IGBC             12676.46            0.28
                                     
                                                   
 Currencies                          daily % change
                                     
                             Latest  
 Brazil real                 4.1142            1.58
                                     
 Mexico peso                19.7991            0.88
                                     
 Chile peso                   722.8            0.37
                                     
 Colombia peso              3403.35            0.80
                                     
 Peru sol                    3.3938            0.30
                                     
 Argentina peso             55.6000            0.28
 (interbank)                         
                                     
 

 (Reporting by Agamoni Ghosh in Bengaluru)
  
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