November 24, 2017 / 10:43 PM / a year ago

EMERGING MARKETS-Colombia cenbank springs surprise rate cut; Mexico peso up

 (Updates with Colombian central bank, final prices)
    By Bruno Federowski
    SAO PAULO, Nov 24 (Reuters) - Colombia's central bank
lowered its main interest rate in a surprise move on Friday,
while Mexico's peso strengthened after the nation's central bank
chief said it was undervalued on a day of otherwise quiet
activity in Latin American markets.
    Five of seven board members of the Colombian central bank
voted to lower the benchmark rate by a quarter point to 4.75
percent, as policymakers seek to boost growth and as inflation
converges to its target quicker than expected.
    Colombia's peso closed down slightly, as did the
country's IGBC main stock index.
    In Mexico, the peso currency firmed by 0.21 percent
to 18.57 to the dollar, though still weaker than the 17 to 18
pesos per dollar range Central Bank Governor Agustin Carstens
considers reasonable.
    The Mexican central bank has repeatedly offered dollar
hedging instruments in order to cushion the currency, which
recently slipped to eight-month lows.
    The peso has been hurt by concerns that U.S. President
Donald Trump may follow up on threats to scrap the North
American Free Trade Agreement (NAFTA), dealing a blow to the
economy, which depends heavily on the United States.
    The Mexican economy shrank for the first time in nearly two
years in the third quarter after hurricanes and earthquakes
pounded the country.
    Mexico's central bank sees growth of up to 3 percent next
year, but is concerned that the NAFTA talks could falter, which
would further dent economic activity and hurt the peso.
    Most other currencies in the region were near flat. The
Brazilian real declined as traders booked profits on a
five-day string of gains.
    Brazil's benchmark Bovespa stock index fell, dragged
down by shares of Centrais Elétricas Brasileiras SA
after the state utility delayed a deadline to sell six power
distribution firms in the northeast of the country.
    Traders in Brazilian markets have erred on the side of
caution as doubts linger on whether President Michel Temer will
manage to pass a plan to streamline the social security system
and curb public debt.
    Key Latin American stock indexes and currencies at 2200 GMT:
 Stock indexes                           daily %    YTD %
                                          change   change
 MSCI Emerging Markets          1154.26     0.16    33.86
 MSCI LatAm                     2817.86    -0.09    20.39
 Brazil Bovespa                74157.37    -0.44    23.13
 Mexico S&P/BVM IPC            47941.88     -0.4     5.04
 Chile IPSA                     5040.51     0.12    21.42
 Chile IGPA                    25366.80     0.02    22.34
 Argentina MerVal              27464.78     0.63    62.34
 Colombia IGBC                 10852.64    -0.09     7.15
 Venezuela IBC                   712.07     1.06   -97.75
 Currencies                              daily %    YTD %
                                          change   change
 Brazil real                     3.2325    -0.31     0.52
 Mexico peso                     18.570     0.21    11.71
 Chile peso                       634.0     0.16     5.79
 Colombia peso                  2978.83    -0.07     0.76
 Peru sol                         3.237     0.12     5.47
 Argentina peso (interbank)       17.35     0.29    -8.50
 Argentina peso (parallel)        18.02     0.17    -6.66
 (Reporting by Bruno Federowski; Editing by Dan Grebler and Lisa
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