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Argentine markets slump as Milei fiscal fears mount

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Peru central bank raises 2025 growth forecast

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IMF sees Mexico growth improving mildly in 2026, urges

debt cuts

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Mexico's cenbank to cut benchmark rate by 25bps - REUTERS

POLL

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LatAm stocks up 0.25%, FX down 0.26%

(Updates with afternoon trading)

By Pranav Kashyap and Nikhil Sharma

Sept 19 (Reuters) - Latin American assets were mixed on

Friday but were poised for solid weekly gains, whereas

Argentina's markets continued to struggle with the local peso

holding steady under the central bank's oversight.

A sharp selloff engulfed the Argentine market this week,

with stocks sliding more than 4% - their fifth weekly

loss in six - and the peso down 1.48%, headed for a

fifth straight weekly decline.

The peso was flat at a record low, while stocks slipped

0.45% on Friday.

Pressured by a weakening currency, Argentina's central bank

sold $678 million in the wholesale market on Friday, marking its

largest daily dollar sale since October 2019.

The week marked the first time the central bank intervened

in the currency market since mid-April, having now offloaded

$1.1 billion in the last three days to curb strong dollar demand

from institutional investors wary of political instability.

Markets have been under strain ever since the recent

legislative setback for President Javier Milei, casting doubts

over the viability of his austerity agenda as the October

midterm elections approach.

"If reserves are being used to defend the effects, it's

limited and you start to see correlations in all asset classes,"

said Alejandro Cuadrado, managing director, global head FX &

LatAm strategy at BBVA.

"What's at stake is the midterms and at some point there has

been an excess of expectations in the performance capacity of

the administration into those elections."

Traders said Argentina's parallel market peso

weakened 0.66% to a record low of 1,520 per dollar, bringing its

weekly depreciation to 6.25%.

Meanwhile, an index for Latin American equities

was on track for a seventh straight weekly gain,

the longest run since November 2020, aided by gains in the

run-up to the Federal Reserve rate decision.

A broader currencies gauge was up 0.83% for

the week, having lost steam following an unexpected jump in the

U.S. dollar after the Federal Reserve delivered a quarter-point

interest rate cut this week.

Even as the Fed reduced rates for the first time since

December, its policy outlook remained less dovish than expected,

pointing to a measured pace of future cuts and a lack of urgency

to launch a full-blown easing cycle.

The LatAm equity index added 0.25% and the currency index

was down 0.26% on Friday.

Brazil's real dipped about 0.1%, taking its weekly

advances to 0.66% so far - its third straight week of gains. The

central bank this week left borrowing costs unchanged at a near

20-year high and indicated a prolonged period until inflation

converges to its target.

Brazilian stocks rose 0.35% on the day - looking at

a weekly advance of over 2.6%.

Mexican stocks gained 0.4%, while the peso was down 0.2%.

Fresh data showed the country's private spending increased 1.2%

in the second quarter.

International Monetary Fund sees the country's growth

slowing in 2025 before inching up in 2026, citing the need for

fiscal and structural reforms.

Mexico's central bank will announce its policy decision next

week. Markets are expecting a quarter-point cut that would take

the benchmark rate to 7.50%.

Peruvian stocks recovered 1.5% after

logging their worst single-day drop in over five months on

Thursday, as approval of a measure allowing partial withdrawals

from private pensions sparked fears that millions could be left

without retirement savings.

Peru's central bank slightly raised its economic growth

forecast on Friday, citing stronger-than-expected non-primary

sector activity and private spending.

Local currency sol fell 0.5%.

Colombian stocks rose 1.34%, gaining for the first

time after three sessions of losses. Its currency peso

jumped 0.54% and was set for its eighth consecutive weekly rise.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily % change

MSCI Emerging Markets 1340.72 -0.38

MSCI LatAm 2530.98 0.25

Brazil Bovespa 146072.05 0.39

Mexico IPC 61567.64 0.4

Chile IPSA 9007.14 -0.65

Argentina MerVal 1688820.12 -0.45

Colombia COLCAP 1847.79 1.34

Currencies Latest Daily % change

Brazil real 5.3169 -0.07

Mexico peso 18.3861 -0.18

Chile peso 954 0.26

Colombia peso 3870.5 0.54

Peru sol 3.498 -0.46

Argentina peso (interbank) 1,474.5 0.00

Argentina peso (parallel) 1,500.0 0.66

(Reporting by Pranav Kashyap in Bangalore; Editing by Andrea

Ricci and Shinjini Ganguli)