EMERGING MARKETS-Latam FX steady as dollar rises, but set to log weekly gains

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Oct 12 (Reuters) – Most Latin American currencies steadied on Friday, giving up some gains from earlier in the session as the dollar gained momentum on a rebound in Wall Street after its two-day slide. But they were still on-course to post weekly gains, bucking a broader developing market gloom, with MSCI’s index of emerging Latin American currencies poised to log a weekly gain for a fourth straight week. The outperformance can be attributed to gains in Brazil due to optimism on the presidential election, and in Argentina on the country’s attempts to shore up its currency and bolster its finances. The dollar gained on Friday, as U.S. and global equity prices recovered, while robust Chinese export figures soothed some worries about the world’s second-biggest economy and its trade war with Washington. This took a toll on the Argentine peso which pared gains and closed weaker ahead of a local holiday on Monday, while Mexico’s currency sustained its gains. The Argentine peso had strengthened on most days in October after the recession-racked country struck a funding deal with the International Monetary Fund and committed to implement economic reforms following the deal. The central bank placed more than 100 billion pesos ($2.85 billion) in short-term notes, or Leliqs, on Friday, completing two full weeks of note sales, at rates as high as 74 percent, aimed at encouraging investment in peso-denominated assets and reducing peso liquidity. Analysts have repeatedly warned of the lack of sustainability of this mechanism at the sky-high rates at which they are being issued as it may lead to indebtedness of the central bank increasing unsustainably. Financial markets in Brazil were closed for a local holiday. The real posted a fourth straight week of gains, and stocks clocked weekly gains for a second consecutive week. The assets were buoyed by optimism of possible economic reforms by a new government as presidential front-runner Jair Bolsonaro kept his lead and looked poised to win the election.

MSCI’s Latin American stock index was also set to log weekly gains for a fourth straight week, with Buenos Aires’ Merval index’s more than 5 percent rise on Friday contributing to the gains. Mexico’s IPC, however, turned to losses and hit a more than three-month low, after having gained more than 1 percent earlier in the session.

Key Latin American stock indexes and currencies at 1913 GMT:

Stock indexes Daily % YTD % Latest change change MSCI Emerging Markets 954.66 -3.15 -17.59 MSCI LatAm 2666.38 -0.95 -5.72 Mexico IPC 47424.93 -0.28 -3.91 Chile IPSA 5147.64 -0.41 -0.41 Argentina MerVal 29074.99 5.29 -3.29 Colombia IGBC 12329.33 0.43 8.43 Currencies Daily % YTD % change change


Mexico peso 18.8650 0.60 4.42 Chile peso 679.5 0.34 -9.54 Colombia peso 3094 -0.18 -3.62 Peru sol 3.334 -0.18 -2.91 Argentina peso (interbank) 36.6000 0.14 -49.18 Argentina peso (parallel) 37.25 0.67 -48.38

(Reporting by Susan Mathew in Bengaluru; Editing by Phil Berlowitz)