August 15, 2019 / 2:29 PM / 8 days ago

EMERGING MARKETS-Argentine peso rebounds after bruising sell-off; Latam FX firm

    By Sruthi Shankar
    Aug 15 (Reuters) - Argentina's peso jumped on Thursday after
a bruising sell-off in the past three sessions and most other
Latin American currencies stabilized amid receding worries about
a recession in the world's largest economy.
    The Brazilian real jumped as much as 1% before easing
slightly to trade at 4.0286 per dollar after the central bank
announced its decision to sell dollars in the spot currency
market for the first time in over a decade.
    The Brazilian central bank said on Wednesday it would sell
up to $550 million daily in the spot market along with reverse
swaps of the same value, in response to rising demand for
liquidity.
    The Mexican peso edged higher ahead of the central
bank's decision on interest rates, due at 2:00 p.m. EDT (1800
GMT). Analysts expect policymakers to hold rates at 8.25%,
according to a Reuters poll, although they are expected to adopt
a dovish tone pointing to impending rate cuts.
    "While our economists call for the easing cycle to begin in
September, they note a high risk for an August start," Citi
analysts wrote in a note.
    "If they cut at this meeting, we would imagine it comes with
language that tries to dissuade the market from positioning for
a very deep cutting cycle, partly because Banxico wants to
observe how MXN reacts to the easing."
    Latin American currencies and stocks lost steam on Wednesday
amid a slump in global financial markets after moves in U.S.
bonds signaled that the world's biggest economy will tip into
recession in the wake of a prolonged trade dispute with China. 
    Easing some of those fears was data that showed U.S. retail
sales rose more than expected last month, suggesting fairly
robust consumer spending.
    However, mixed reports on the U.S.-China trade front kept
investors wary. News that China will retaliate against the
latest U.S. tariffs hit global stocks, which turned around after
a Beijing official said China hoped the two sides will come to
deal.
    The Argentine peso opened stronger after a three-day
rout in the currency on investor worries about the country's
return to populist policies after business friendly President
Mauricio Macri fared worse than expected in this week's
presidential primaries.
    The peso jumped nearly 4.7% to trade at $57.5 per dollar
after shedding more than 24% over the past three days even as
Macri announced a series of welfare subsidies and tax cuts for
lower-income workers. Opposition candidate Alberto Fernandez
said he was comfortable with the current exchange rate of 60
pesos per U.S. dollar.    

    Latin American stock indexes and currencies at 1344 GMT:
    
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       961.82    -0.27
                                     
 MSCI LatAm                 2568.64    -1.07
                                     
 Brazil Bovespa            99335.09    -0.92
                                     
 Mexico IPC                       -        -
                                     
 Chile IPSA                       -        -
                                     
 Argentina MerVal                 -        -
                                     
 Colombia IGBC                    -        -
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.0373     0.39
                                     
 Mexico peso                19.6785    -0.02
                                     
 Chile peso                       -        -
                                     
 Colombia peso              3457.64    -0.06
                                     
 Peru sol                         -        -
                                     
 Argentina peso             57.4955     4.82
                                     
 

 (Reporting by Sruthi Shankar in Bengaluru; 
Editing by Sandra Maler)
  
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