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Chile c.bank to cut interest rate to 5.75% in June, poll

says

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Peru interest rate decision due

(Updated at 3:33 p.m. ET/1933 GMT)

By Ankika Biswas and Shashwat Chauhan

June 13 (Reuters) - Argentine assets rallied on

Thursday, as investors drew comfort from the Senate passing

President Javier Milei's economic reform bill, while Mexico's

peso jumped 1% against the dollar.

The bill to boost investment by privatizing state

entities and providing incentives for businesses is key to the

libertarian president's economic reform plans. Protesters set

fires and clashed with police in the streets outside Congress.

The country's international dollar-denominated bonds gained

across the curve, with the 2029 maturity enjoying

the biggest increase, up 2.5 cents to be bid at 57.5,

MarketAxess data showed. Bonds were also boosted by Argentina

and China renewing the activated part of a major currency swap

line of $5 billion through July 2026.

The Argentine peso also jumped 4.9% to 1,225 per

dollar in the parallel black market, while the benchmark stock

index soared 1.7%.

"All in all, the approval of the omnibus bill and part of

the fiscal package, even if they have been diluted considerably

from the original proposals, constitutes a relevant and positive

milestone in the rebalancing of the Argentine economy," Goldman

Sachs economists noted.

Meanwhile, Argentina's monthly inflation rate stood at 4.2%

in May, while inflation in the 12 months through May landed at

276.4%, below a poll forecast of 279.4%.

The Mexican peso strengthened 1.5% against the dollar

after logging sharp losses in the last two sessions as investors

fretted over the ruling party coalition dominating in general

elections, emboldening politicians to pursue controversial

reforms to the constitution.

The Bank of Mexico's Governor Victoria Rodriguez said the

central bank is monitoring the recent volatility in domestic

financial markets and could act to restore order in the event of

atypical or extreme behavior.

Weakness in most Latam currencies was also due to a firm

dollar index after the Federal Reserve adopted a hawkish

tone on Wednesday and pushed out the start of rate cuts to

perhaps as late as December.

The currency of the world's largest copper producer, Chile's

peso, slipped 0.2%, hurt by weak prices of the red

metal, while Brazil's real appreciated 0.8% as iron ore

prices rebounded.

Chile's central bank is expected to lower its benchmark

interest rate by 25 basis points at next week's monetary policy

meeting, a poll of traders by the bank showed.

The Colombian peso slumped 3% against the dollar,

falling for the third day and touching its lowest level in more

than seven months.

Peru's interest rate decision during the day was also on

investors' watch list. The sol held steady at 3.76 per

dollar.

Key Latin American stock indexes and currencies:

Latest Daily % change

MSCI Emerging Markets 1075.39 0.64

MSCI LatAm 2169.47 0.29

Brazil Bovespa 119881.32 -0.05

Mexico IPC 52377.23 -1.13

Chile IPSA 6507.49 -0.42

Argentina MerVal 1594812.49 1.704

Colombia COLCAP 1388.63 0.57

Currencies Latest Daily % change

Brazil real 5.3719 0.56

Mexico peso 18.4650 1.44

Chile peso 917.1 -0.08

Colombia peso 4142.5 -2.95

Peru sol 3.7614 -0.04

Argentina peso 902.0000 0.00

(interbank)

Argentina peso 1225 4.90

(parallel)