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IMF lowers bar for Argentina's reserve accumulation target

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Markets increase bets on September Fed rate cut

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Colombia bonds rise after cash repurchase offer

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MSCI Latam FX up 0.7%, stocks gain 0.83%

(Updates with afternoon levels)

By Purvi Agarwal and Ragini Mathur

Aug 4 (Reuters) - Most Latin American currencies

strengthened against the dollar on Monday, as U.S. economic

worries led to higher prospects of interest rate cuts, while

some caution over tariffs remained.

MSCI's index tracking Latam currencies was

up 0.7%, trading at its highest in over one week.

Chile's peso appreciated 0.4% against the greenback,

with rising copper prices also boosting the currency.

Colombia's peso was up 0.6%. Colombia's global

dollar-denominated bonds also rose on the day after the

government offered cash to buy back maturities between 2030 and

2061.

Argentina's peso gained 0.4%. The International

Monetary Fund lowered the bar for Argentina's reserve

accumulation targets through 2026 in its $20 billion program on

Friday.

Brazil's real gained 0.8%, in line with peers. The

country's government has set aside for now plans for direct

retaliation against steep U.S. tariffs taking effect this week,

focusing instead on a relief package for industries hit hardest

by the levies.

Brazil faces 50% tariffs on exports to the U.S., from August

7, a new deadline set by U.S. President Donald Trump last week.

Trump also extended the negotiating deadline with Mexico by

another 90 days last week, providing some relief to the U.S.

southern neighbor.

Mexican peso was the only major Latin American

currency to weaken on the day, slipping 0.2% against the dollar.

"If you look at the price action recently, the Mexican

peso has shown particular resilience on a global scale," said

Alejandro Cuadrado, global head of FX and Latam strategy at

BBVA.

"Continued and heavier long positioning in the peso has

helped it stand out, and I think now we're seeing a bit of a

catch up of the rest versus the Mexican Peso".

The dollar index was slightly higher on Monday,

recovering some of the declines from its over 1% fall on Friday,

following events that highlighted the fragility of the greenback

- a dismal U.S. jobs report and the subsequent firing of a top

statistics official by Trump.

Also, the

resignation of Federal Reserve Governor Adriana Kugler on

Friday opened up room for Trump to appoint a replacement, amid

strained relations with Fed Chair Jerome Powell and repeated

calls for lower interest rates.

This revived some bets on a September interest rate cut from

the Federal Reserve.

"The recent developments have contributed to resumption of

dollar softness, a compression in yields and that in general is

positive for emerging markets and in particular for risk, as

long as you're not pricing higher chances of recession, which

obviously the stock market is not pricing today," Cuadrado said.

Regional equities capitalized on the optimism, with MSCI's

gauge of regional equities up 0.83%.

Heavyweight Brazilian equities were up 0.4%, while

ones in Mexico were down 0.4%.

Shares of Walmart's Mexico unit slipped 1.1% on

Monday after the company announced on Friday that its chief

executive would step down.

Stocks in Chile and Argentina were 0.6%

and 0.4% higher, respectively.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1237.05 0.89

MSCI LatAm 2243.4 0.83

Brazil Bovespa 132973.26 0.4

Mexico IPC 56685.03 -0.38

Chile IPSA 8212.93 0.63

Argentina Merval 2287328.8 0.37

8

Colombia COLCAP 1751.55 0

Brazil real 5.5 0.75

Mexico peso 18.889 -0.19

Chile peso 965.22 0.4

Colombia peso 4098.07 0.59

Peru sol 3.5644 0.44

Argentina peso (interbank) 1358

0.41

Argentina peso (parallel) 1310 -1.15