August 30, 2019 / 2:44 PM / 6 months ago

EMERGING MARKETS-Argentine peso slides after 'junk' rating; Latam stocks rise

    By Agamoni Ghosh
    Aug 30 (Reuters) - Argentina's peso weakened on Friday,
underperforming the broader Latin American markets, after
ratings agency Standard & Poor's announced it was slashing its
long-term credit rating to the deepest area of junk debt.
    The ratings action comes following the government's
announcement to "re-profile" some $100 billion in debt earlier
in the week, sinking Argentine bonds and igniting worries of a
full-blown debt crisis for Latin America's third-largest
    "Lengthening maturities will not solve the overarching
problem of over-indebtedness," said analysts at J Safra Sarasin
Asset Management. 
    "Moreover, the central bank cannot continue to burn through
its foreign exchange reserves in order to defend the peso,
indicating another sharp devaluation may rock markets again."
    The peso fell nearly 2% in early trading and is on
track to record its worst month since August 2018.
    The Argentine currency has shed about 24% of its value,
while the Merval has plunged more than 45% since
business-friendly Mauricio Macri suffered a thumping  in
primaries at the hands of populist-leaning Peronist candidate
Alberto Fernandez.
    The rest of the Latin American markets however, took comfort
from U.S.-China trade hopes with stocks rising
over 1%.
    Sao Paulo-traded stocks climbed 0.8%, while the real
 gained half a percent against a softer dollar.
     Brazil's central bank President Roberto Campos Neto said on
Friday that in view of the current economic situation a
stimulative monetary policy was required, signaling the bank
could slash borrowing cuts further. 
    Chile's peso rose marginally but was on track to end
the month over 2% lower as falling copper prices have taken a 
toll on the world's top producer of the red metal. 
 Key Latin American stock indexes and currencies at 1420 GMT
 Stock indexes                            daily % change
 MSCI Emerging Markets           983.17             1.35
 MSCI LatAm                     2582.67             1.07
 Brazil Bovespa               101146.35             0.62
 Mexico IPC                    42002.75             0.41
 Chile IPSA                     4738.26             0.98
 Argentina MerVal                     -                -
 Colombia IGBC                 12510.98             0.14
 Currencies                               daily % change
 Brazil real                     4.1457             0.58
 Mexico peso                    20.0890             0.21
 Chile peso                       719.2             0.15
 Colombia peso                  3416.22             0.58
 Peru sol                             -                -
 Argentina peso                 58.6000            -1.79

 (Reporting by Agamoni Ghosh in Bengaluru; Editing by Andrea
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