EMERGING MARKETS-Mexican peso hits 3-month lows, leads Latam FX slide as dollar rallies

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    * Mexican peso pressured by coronavirus worries
    * Chilean peso hits over one-year lows
    * Mexican c.bank seen hiking rates in upcoming meeting

 (Adds bullets, details, updates prices throughout)
    By Susan Mathew and Shreyashi Sanyal
    Sept 29 (Businesshala) - Mexico's peso fell to its lowest level
in over three months on Wednesday as the country's financial
stability council warned the coronavirus pandemic still posed
risks, while most other Latin American currencies slipped as the
dollar strengthened. 
    MSCI's index of Latam currencies slipped
0.4% to its lowest in more than one month.
    Mexico's peso dropped 1.4% to lead declines among
Latam peers, a day ahead of a central bank policy meeting. 
    The economic and financial environment in Mexico continues
to be influenced by the evolution of the pandemic, the Financial
Stability Council said. Mexico's confirmed cases of the disease
stood at over 3.5 million as of Tuesday while the death toll
rose to 276,376.
    The council also pointed to risks from a potential downgrade
of the credit rating of state oil company Pemex. Latam's most
indebted company, Pemex has been a weight on Mexico's sovereign
credit rating, pressuring the country's financial assets. 
    On Thursday, the central bank is seen hiking the benchmark
interest rate by 25 basis points to 4.75% as inflation
accelerated faster than expected during the first half of
September to 5.87%, above the target rate of 3%.
    Credit Suisse analysts expect the vote to be split, with two
board members voting in favor of no change in the overnight
rate. They are watching for inflation forecasts. 
    "We think that the bank will increase its inflation
projections by 10bps-20bps for the third quarter of 2021, from
5.6%, and by a more meaningful amount (up to 40bps) for the
final quarter of the year..."
    In Chile, the peso fell 1.1% to hit over one-year
lows hit on Tuesday. 
    Chile's lower congressional chamber on Tuesday approved a
bill that would allow citizens to make a fourth withdrawal from
their pension funds, and sent it to the Senate for a vote,
despite opposition from the government. 
    Chilean dollar bonds maturing in 2025 and 2026
 hit their lowest since the second quarter of 2020. 
    Brazil's real extended losses to a sixth straight
session, while in Argentina, economic activity rose 11.7% in
July versus the same month a year earlier, official data showed
on Tuesday, comfortably ahead of analyst forecasts.
    Sao Paulo's Bovespa index recovered 1% after
a 3% tumble on Tuesday. Material stocks led gains, with iron ore
miner Vale being the biggest boost as prices of the
steel-making ingredient jumped 2%.    
    Among other regions in emerging markets, Tunisian government
bonds, made their best gains
in a year after President Kais Saied appointed Najla Bouden
Romdhane, a geologist with little political experience, as the
country's first woman prime minister.
    
        
    Key Latin American stock indexes and currencies at 1832 GMT:
    
        Stock indexes                  Latest    Daily %
                                                  change
 MSCI Emerging Markets                  1250.02     -0.86
 MSCI LatAm                             2230.32      0.25
 Brazil Bovespa                       111255.29      1.03
 Mexico IPC                            51191.88      0.52
 Chile IPSA                             4338.21      0.34
 Argentina MerVal                      76634.21     1.089
 Colombia COLCAP                        1351.99      0.11
                                                         
            Currencies                 Latest    Daily %
                                                  change
 Brazil real                             5.4324     -0.11
 Mexico peso                            20.5710     -1.24
 Chile peso                               810.9     -1.07
 Colombia peso                          3833.53     -0.05
 Peru sol                                4.1216     -0.15
 Argentina peso (interbank)             98.7100     -0.04
                                                 
 Argentina peso (parallel)                  184      1.63
                                                 
 
    
    

    
 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru;
Editing by William Maclean and Gareth Jones)
  
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