*

Peruvian Prime Minister Alberto Otarola resigns

*

Egypt signs expanded $8 billion loan deal with IMF

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FX flat, stocks add 0.4%

(Updated at 3:10pm ET/2010 GMT)

By Shashwat Chauhan and Lisa Pauline Mattackal

March 6 (Reuters) - Most Latin American currencies rose

against the dollar on Wednesday as the greenback lost steam

after Federal Reserve Chair Jerome Powell said he expected

interest rate cuts this year, while the Egyptian pound

tumbled after its central bank devalued the currency.

The dollar index was down 0.3% after Powell's

comments.

"(Powell's testimony was) a similar message to other Fed

officials in that they are inclined to cut rates later this

year, but need to see more evidence to justify that action,"

said James Knightley, chief international economist at ING.

Leading gains among Latin American currencies was the

Mexican peso, up 0.3% against the dollar to 16.8880, a

seven-week high.

The Brazilian real, the currency of Latin America's

largest economy, rose 0.2%, touching one-week highs of 4.9482

versus the dollar.

Meanwhile, Egypt's pound sank as low as 50 to the dollar for

the first time after its central bank devalued the currency and

hiked interest rates by 600 basis points. That was shortly

followed by confirmation of an expanded $8 billion deal with the

International Monetary Fund.

The premium demanded by investors to hold Egypt's

international bonds over safe-haven U.S. Treasuries tightened to

as little as 529 basis points, its lowest level since June 2021,

according to JPMorgan . The spread was last at 580

bps.

"Geopolitical developments will continue to play an outsized

role in Egypt's economic stabilization, but the financial and

monetary policy elements are now in place," said Geoff Yu, EMEA

macro strategist at BNY Mellon.

Regional Latin American currencies were also lifted by

rising crude oil prices. Oil exporter Colombia's peso

gained 0.5%.

Argentina's peso on the parallel informal market broke back

below the 1,000 per dollar mark, reaching its strongest level

since the end of December as investors were reassured by

president Javier Milei's pledge last week to continue pushing

pro-market reforms.

Argentinian shares rose 0.7%.

Chile's peso continued its recent dour run, reversing

early gains to fall 0.4%, set to decline for the fourth

consecutive session.

Those losses weighed on MSCI's basket of Latin American

currencies which was flat on the day.

Peru's sol gained 0.3%. Overnight, Peruvian Prime

Minister Alberto Otarola said he had tendered his resignation.

A gauge of Latin American stocks gained

0.4%, with heavyweight Brazil's main stock index up

0.6%.

HIGHLIGHTS

** EM forex to struggle while Fed stays cautious on rate

cuts - Reuters poll

** Polish central bank keeps rates on hold

** Brazil's industrial production posts worst monthly

performance in nearly three years

** Argentina industrial output plunges again as austerity

bites

** EXCLUSIVE-Mexico's Pemex, Carlos Slim team met to discuss

deepwater gas project -sources

Key Latin American stock indexes and currencies at 2010 GMT:

Latest Daily %

change

MSCI Emerging Markets 1028.53 0.66

MSCI LatAm 2526.07 0.42

Brazil Bovespa 128892.29 0.62

Mexico IPC 55360.07 -0.21

Chile IPSA 6348.02 1.42

Argentina MerVal 999642.14 0.701

Colombia COLCAP 1312.70 0.91

Currencies Latest Daily %

change

Brazil real 4.9482 -0.08

Mexico peso 16.8908 0.31

Chile peso 984.3 -0.39

Colombia peso 3922.5 0.45

Peru sol 3.7226 0.26

Argentina peso 845.5000 0.00

(interbank)

Argentina peso 970 4.12

(parallel)