*

Brazil's government improves fiscal outlook for the year

*

Argentina dollar deposits spike by $8 billion under Milei

*

Chile mulled 25, 50-bps rate cuts at Sept meeting- minutes

*

Latam FX down 0.5%, stocks down 0.7%

By Ankika Biswas

Sept 23 (Reuters) - An index tracking major Latin

American currencies fell to an over one-week low on Monday after

recent gains, dragged by the Brazilian real, while the Mexican

peso regained some lost ground ahead of a monetary policy

decision due later in the week.

The MSCI index for Latam currencies dipped

0.5% after logging its third straight weekly advance on Friday.

Brazil's real fell 0.8% against the dollar, emerging

as the worst regional performer. The currency hit a 10-day low,

retreating for the second session after a six-day winning

streak.

Brazil's government slightly reduced the expected primary

deficit for the current fiscal year late on Friday, attributing

the revision to improved revenues that more than offset the need

for a new expenditure freeze to ensure compliance with a

spending cap.

Peru's sol also dipped 0.5%, likely weighed down by

weak copper prices. Moody's Ratings changed the country's

outlook to "stable" from "negative," affirming its "Baa1"

ratings.

On the flip side, the Mexican peso strengthened 0.3%

against the greenback, after a three-day losing streak.

The country's central bank is set to announce its policy

decision on Thursday. Following its 25-basis-point rate cut in

early August in a divided vote, an easing in the latest headline

inflation report boosted expectations of yet another cut.

However, an inflation report out of the Latam nation is due

on Tuesday that could provide further clues on the policy

outcome.

"Mexican CPI and economic activity data could surprise

significantly lower and lift the odds of a 50-bps cut by

Banxico. Still, a cautious 25-bps rate cut remains the likelier

move," Scotiabank said in a note.

Among others, Chile's peso was the top regional

gainer, hitting an almost one-week high, while the benchmark

stocks index fell after investors returned from a

three-day equity market holiday.

Minutes from Chile's September policy meeting showed the

central bank considered lowering the benchmark rate by 25 or 50

basis points, but "quickly ruled out" the second option.

Colombia's peso also strengthened 0.2% to hit an over

two-week high. The government is yet to present a budget

proposal to Congress ahead of its revised deadline of Sept. 25.

Central bank data showed Argentina's foreign currency

deposits have jumped by around $8 billion since libertarian

President Javier Milei took office in December, driven by a

series of pro-market austerity measures and incentives to lure

dollars back into the financial system.

Elsewhere, Sri Lanka's benchmark stock index jumped

over 1% to a near one-month high, while its dollar bonds slipped

2 cents, after the newly elected leftist leader Anura Kumara

Dissanayake took over as president of the island nation.

HIGHLIGHTS:

** Mexican economy grows 0.6% in July from June, July retail

sales rise 0.7% from June

** Czechs to offer up to CZK 21 bln in bonds in October,

plans new 20-year bond

Key Latin American stock indexes and currencies at 1416 GMT:

Equities Latest Daily % change

MSCI Emerging Markets 1109.61 0.29

MSCI LatAm 2207.31 -0.80

Brazil Bovespa 130686.31 -0.29

Mexico IPC 52143.47 -0.09

Chile IPSA 6326.41 -0.32

Argentina Merval 1822928.29 NULL

Colombia COLCAP 1320.76 -0.01

Currencies Latest Daily % change

Brazil real 5.5584 -0.87

Mexico peso 19.3263 0.4

Chile peso 922.96 0.79

Colombia peso 4144.02 0.22

Peru sol 3.7589 -0.4

Argentina peso (interbank) 965 -0.207253886

Argentina peso (parallel) 1225 1.632653061