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EMERGING MARKETS-Latam FX firm; Pemex move puts Mexico's credit rating in focus

    * Brazil's real extends gains to third straight session 
    * Bovespa ends longest weekly winning streak in eight years
    * Pemex move worsens credit outlook for Mexico - Citi

    By Susan Mathew
    March 19 (Reuters) - Most Latin American currencies joined
broader emerging market peers in the black on Friday, looking to
end a week dominated by monetary policy surprises on a high
note.
    Mexico's peso rose 0.4% to stay near one-month highs
and was on course to end the week up about 2%, while Chile's
peso rose 0.3%. Declining oil prices saw Colombia's peso
 underperform, down 0.2%.
    Emerging market (EM) currencies got a boost this week from
the U.S. Federal Reserve maintaining its dovish stance, leaving
interest rates rate near zero. Low rates in the United States
bode well for high yielding currencies as the interest rate
differential makes them more appealing for carry trades. 
    With inflationary pressures driving bumper rate hikes in
Brazil and Turkey and a surprise increase by Russia, the EM
currencies index was on track to break a
four-week losing streak. 
    Brazil's real extended gains to a third
straight session, leaving it up around half a percent since last
Friday.
    But with COVID-19 cases still surging in Latin America,
economic fundamentals still reeling from the pandemic, and
political worries persisting, Latam assets have lagged EM peers.
    On Thursday, Mexican state-oil firm Pemex's chief executive
said the government had agreed to absorb regular debt payments
this year for Latam's most indebted company.
    With $113.2 billion in debt as of 2020, Pemex's burden on
Mexico has seen credit rating downgrades by top agencies. 
    "This announcement shows that the strategy of the government
will continue to be to support Pemex in gradual steps, without a
significant change in its business plans, putting increased
pressure on sovereign finances," said Citi Research strategists.
    "This means a continued worsening credit outlook for the
sovereign and the need to find additional resources, most likely
through a fiscal reform to be presented in September, together
with the 2022 budget."
    Among stocks, state-controlled Brazilian lender Banco do
Brasil fell up to 0.8%, after its chief executive
submitted his resignation on Thursday after months of pressure
for his ouster from President Jair Bolsonaro.
    Planemaker Embraer rose more than 2% after
reporting its best quarter so far during the COVID-19 pandemic.

    On the week, Brazil's benchmark Bovespa index was
set to end a seven-week winning streak - its longest in eight
years, down more than 3%. 
    
    Key Latin American stock indexes and currencies at 1400 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1334.24    -0.97
                                   
 MSCI LatAm               2330.59     0.31
                                   
 Brazil Bovespa         114819.01    -0.01
                                   
 Mexico IPC              47354.70    -0.46
                                   
 Chile IPSA               4847.39    -0.64
                                   
 Argentina MerVal               -        -
                                   
 Colombia COLCAP          1325.40    -0.01
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.5271     0.70
                                   
 Mexico peso              20.4090     0.30
                                   
 Chile peso                 718.3     0.25
                                   
 Colombia peso             3551.8    -0.19
                                   
 Peru sol                  3.7097    -0.05
                                   
 Argentina peso           91.3500    -0.05
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru. Editing by Mark
Potter)
  
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