May 8, 2018 / 3:32 PM / 18 days ago

EMERGING MARKETS-Argentine peso hits all-time low as Iran woes add to sell-off

    By Bruno Federowski
    BRASILIA, May 8 (Reuters) - The Argentine peso hit a new
record low on Tuesday as pessimism about the United States
remaining in the Iran nuclear deal added fuel to a weeks-long
global emerging market sell-off.
    U.S. President Donald Trump is expected to announce on
Tuesday that he is pulling out of the Iran nuclear deal,
European officials said, after they struggled to persuade him
that the accord has halted Iran's nuclear ambitions.

    Increased geopolitical tensions contributed to driving
investors away from high-yielding assets, already under pressure
from growing expectations of higher U.S. interest rates.
    The Argentine peso led the losses, weakening as
much as 6.5 percent to 23.5 per dollar. 
    After plummeting in recent weeks, the peso had stabilized in
the previous two trading days in the wake of sharp interest rate
hikes.
    The global emerging market sell-off drove some to bet that
other central banks in developing economies could follow suit
and pursue tighter policies to stem capital outflows. 
    Yields on Brazilian interest rate futures rose on Tuesday as
bets grew that the central bank could keep interest rates steady
next week.
    Bank of America Merrill Lynch, for instance, revised its
forecast for the central bank's policy meeting to show the Selic
kept at 6.50 percent.
    Still, most analysts remained unperturbed and interest rate
futures continued to price a higher likelihood of a 25
basis-point cut.
    "With the exception of Argentina, the recent depreciation of
Latam currencies is not yet alarming and given the prevailing
inflation situation, only marginally affects our monetary policy
calls for the next few meetings," economists at Societe Generale
wrote in a report.
    
    Key Latin American stock indexes and currencies at 1520 GMT:
 Stock indexes                               daily %   YTD %
                                              change  change
                                   Latest             
 MSCI Emerging Markets              1139.78     0.02   -1.63
 MSCI LatAm                         2783.01    -1.26   -0.34
 Brazil Bovespa                    82523.33    -0.23    8.01
 Mexico IPC                        46493.84     0.04   -5.80
 Chile IPSA                         5628.15    -0.31    1.14
 Chile IGPA                        28374.59    -0.24    1.41
 Argentina MerVal                  26282.16    -4.47  -12.58
 Colombia IGBC                     12179.14    -0.63    7.11
                                                            
 Currencies                                  daily %   YTD %
                                              change  change
                                                      
                                     Latest           
 Brazil real                         3.5866    -0.96   -7.62
 Mexico peso                        19.5955    -0.69    0.53
 Chile peso                           638.6    -1.53   -3.75
 Colombia peso                       2869.8    -1.73    3.91
 Peru sol                             3.288    -0.30   -1.55
 Argentina peso (interbank)         23.0200    -4.56  -19.20
                                                      
 Argentina peso (parallel)            22.55    -2.44  -14.72
                                                      
 
 (Reporting by Bruno Federowski; Editing by Richard Chang)
  
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