EMERGING MARKETS-Colombian peso slides after rate cut; Strong dollar pressures other Latam FX

 (Adds Colombian Central bank decision, updates prices)
    By Medha Singh and Susan Mathew
    Sept 25 (Reuters) - A strong dollar pressured most Latin
American currencies on Friday, with Colombia's peso leading
losses after the country's central bank cut interest rates to a
historic low.
    The bank trimmed the rate by 25 basis points to 1.75%. The
market was split on whether the bank would pause after cutting
the rate by a total of 225 basis points over the last six
months, or continue the easing cycle.
    The peso lost 1.6%, declining for the eighth session
in nine, and pushing weekly losses to 4% - its worst in more
than three months. 
    Other Latam currencies weakened as investors fled to the
dollar at the end of a turbulent week marred by rising risks to
the global economic recovery and political uncertainty tied to
the Nov. 3 U.S. presidential election.
    An impasse in the U.S. Congress over another relief package
to battle the economic fallout of the coronavirus crisis also
    Brazil's real dropped 0.7%, as did Mexico's peso
 weighed additionally by lower oil prices. On the week,
the peso lost around 5.5% - its worst in nearly six months.   
    "Brazil seems better positioned than Mexico for the recovery
in labor markets," Morgan Stanley economists wrote in a note,
adding that soft forward-looking indicators continue to point to
Brazil's economy outperforming in the future.
    Data on Friday showed Mexico's economy grew 5.7% in July
from June.
    MSCI's index of developing world stocks and
currencies were on pace for their biggest weekly
slump since the coronavirus-led crash in March.
    The battered Argentine peso weakened further
after hitting a series of record lows. FTSE Russell downgraded
Argentina's stock market to "unclassified" from "frontier
market" as the country tightened access to foreign currency.

    Argentine companies are also facing an increasingly
difficult task to keep up with payments on dollar-denominated
debt, hiking the risk of a wave of corporate defaults amid
capital controls.
    Buenos Aires' Merval index lost as much as 1% before
trading flat, but ended the week slightly higher. 
    Chile's peso retreated, tracking a drop in the price
of copper, the country's top export.  
    Stocks in Chile and Mexico provided a
bright spot, while those in Brazil and Colombia
    Key Latin American stock indexes and currencies at 1855 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1057.46    -0.03
 MSCI LatAm               1847.65     0.16
 Brazil Bovespa          96468.34    -0.56
 Mexico IPC              36440.60     0.62
 Chile IPSA               3572.47     0.03
 Argentina MerVal        41877.53    0.004
 Colombia COLCAP          1171.30    -0.78
      Currencies          Latest   Daily %
 Brazil real               5.5524    -0.73
 Mexico peso              22.3410    -0.87
 Chile peso                   787    -0.36
 Colombia peso               3885    -1.54
 Peru sol                   3.586     0.11
 Argentina peso           75.8400    -0.08
 (Reporting by Medha Singh in Bengaluru
Editing by Paul Simao)