* IMF expects deal with Argentina in days, peso to weaken * Mexico July inflation eases to lowest in two years * Moody's lowers outlook on indebted Pe
* IMF expects deal with Argentina in days, peso to weaken * Mexico July inflation eases to lowest in two years * Moody’s lowers outlook on indebted Pemex to negative * IRB Brasil plunges on monthly loss, BTG Pactual downgrade By Ankika Biswas July 24 (Reuters) – Most major Latin American currencies gained on Monday, with the currency of oil exporter Mexico among top gainers on higher crude oil prices, while the Chilean peso fell on mounting expectations of an interest rate cut from the country. The MSCI index for Latam currencies rose 0.8%, with traders awaiting major central bank decisions out of Japan, the United States and Europe this week. Mexico’s peso gained 0.8% against the greenback, with traders parsing Mexico’s headline inflation rate, which eased to 4.79% in the first half of July to its lowest level in more than two years, but still above the 3% target. A Reuters poll showed Mexico’s economy will likely slow in step with an expected moderation of growth in the United States, but the decline could be limited by increased investment from companies relocating to the country. Focus was also on Argentina, with the peso weakening as much as 0.56% to 531 pesos against the dollar to reach a historic low in black market trading. It was last down 0.2%. The International Monetary Fund on Sunday said it should in the coming days finalize the basis for a staff-level agreement with Argentina over a review of its $44 billion loan to the country. The country is set to unveil measures that will in effect devalue the peso as part of the deal, while also introducing a new preferential exchange rate for agricultural exports and levies on imports, which will effectively devalue the peso, according to a government official. Citi analysts said Argentine credit enjoyed positive momentum in recent weeks on Economy Minister Sergio Massa’s presidential candidacy, reducing the risk of a non-market-friendly administration. Hopes of the IMF deal renegotiation also aided the rally, particularly in 2030 external bonds. The Brazilian real gained 0.9%, ahead of a July inflation reading on Tuesday, expected to ease further. Bucking the trend, the Chilean peso fell 0.5% to a four-month low as market participants anticipated the country’s central bank heralding a rate-cutting cycle in Latam this week. “Inflation has surprised to the downside, inflation expectations are falling rapidly, and domestic demand is under severe pressure, all deserving a bolder rate cut,” said Andres Abadia, chief Latam economist at Pantheon Macroeconomics, who anticipates a 100-basis-point rate cut. Meanwhile, a Reuters poll showed Colombia is expected to hold its benchmark interest rate at 13.25% for the second month in a row at July end, partly due to slowing inflation. However, higher crude prices aided a 0.3% gain in Colombia and Mexico’s peso, the currency of leading oil exporters. The MSCI index for Latam stocks gained 1%. Brazilian reinsurer IRB Brasil plunged 15%, the biggest laggard on benchmark Bovespa, after reporting a monthly net loss and brokerage BTG Pactual’s downgrade to “sell” from “neutral.” Moody’s Investors Service changed Mexican state energy company Pemex’s credit ratings outlook to negative from stable on the scope of increased credit risks. Key Latin American stock indexes and currencies at 1501 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1013.19 -0.14 MSCI LatAm 2534.09 1.04 Brazil Bovespa 120430.07 0.18 Mexico IPC 53520.33 -0.34 Chile IPSA 6275.36 -0.41 Argentina MerVal 474738.18 0.373 Colombia COLCAP 1176.04 0.27 Currencies Latest Daily % change Brazil real 4.7359 0.91 Mexico peso 16.8464 0.77 Chile peso 826.3 -0.46 Colombia peso 3945.76 0.28 Peru sol 3.5812 -0.15 Argentina peso (interbank) 271.2500 -0.66 Argentina peso (parallel) 529 -0.19 (Reporting by Ankika Biswas in Bengaluru;editing by Jonathan Oatis)
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