November 14, 2019 / 9:02 PM / a month ago

EMERGING MARKETS-Mexican peso higher after rate cut, Latam FX falls for 9th session

    * Mexican central bank cuts interest rates by 25 bps 
    * Chile peso hits new low as unrest continues
    * Latam stocks pulled higher on gains from Bovespa 

 (Updates prices, adds Mexico central bank decision, comment)
    By Medha Singh
    Nov 14 (Reuters) - The Mexican peso reversed course on
Thursday to trade higher after Mexico's central bank lowered
borrowing costs for the third time this year, while Chile's peso
hit fresh record lows despite intervention by its central bank.
    A divided Banxico cut interest rates by 25 basis points to
7.50%, in line with the consensus forecast of a Reuters poll of
analysts published earlier this week, but flagged growth risks
for Mexico, Latin America's second largest economy.
    The peso, which had slid about 1% in the run-up to
the central bank decision, moved higher.
    Two of the bank's five-member board voted to cut rates by 50
basis points.
    "The easing cycle will continue until next year until the
overnight rate is 6.25% by the end of 2020," said Gabriela Soni,
chief investment officer for Mexico at UBS Global Wealth
Management.      
    "We do, however, recognize that monetary policy could be
less effective as uncertainty about the domestic economic
policy, increasing violence, and security problems will continue
weighing on investment decisions."
    Mexico narrowly escaped sliding into recession in the first
half of 2019, and preliminary figures showed that gross domestic
product inched forward by just 0.1% in the third quarter. 
    MSCI's index tracking Latin American currencies 
 eyed its ninth consecutive session of declines
as broader risk sentiment took a hit from weak economic data out
of major global economies such as China and the Eurozone.
    Brazil's real and Colombia's peso fell between
0.5% and 0.7%, while the Chilean peso tumbled another 1%
to hit a fresh all-time low, despite the central bank injecting
$4 billion into the financial system on Thursday to boost
liquidity.
    The country has been hit by weeks of protests that have hurt
investor confidence.
    "Markets were hoping that (intervention) would stabilize the
Chilean peso and instead we broke through a key psychological
level of 800," said Paresh Upadhyaya, director of currency
strategy at Amundi Pioneer Investments.
    Stocks in the region were pulled slightly
higher by heavyweight Brazil's Bovespa. 
    Shares in Via Varejo rose 7% after the retailer
said an in-house investigation into alleged accounting
irregularities has not uncovered anything so far.
    Stocks in Chile were up 1.3% but still on track to
lose nearly 5% for the week.
        
  Key Latin American stock indexes and currencies at 2024 GMT: 
 Stock indexes                    Latest     daily % change
 MSCI Emerging Markets            1042.20    -0.16
                                             
 MSCI LatAm                       2659.50    0.22
                                             
 Brazil Bovespa                   106423.97  0.34
 Mexico IPC                       43086.41   -0.03
 Chile SPIPSA                     4498.52    1.96
 Argentina MerVal                 31019.69   -4.085
 Colombia IGBC                    13190.43   -0.4
                                             
 Currencies                       Latest     daily % change
 Brazil real                      4.1855     -0.38
 Mexico peso                      19.3240    0.13
 Chile peso                       803.8      -1.11
 Colombia peso                    3450       -0.73
                                             
 Peru sol                         3.387      0.03
 Argentina peso (interbank)       59.6950    0.06
                                             
 

 (Reporting by Medha Singh and Agamoni Ghosh in Bengaluru;
Additional reporting by Kate Duguid in New York, Editing by
Rosalba O'Brien)
  
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