*

Bank of Mexico's Mejia eyes rate cut, but cautious on

inflation

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Brazil's VP sees dollar between 4.9-5 reais as competitive

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Argentina clears over $52 billion in massive bond swap

*

FX up 0.3%, stocks up 0.6%

By Ankika Biswas

March 13 (Reuters) - Currencies of most resource-endowed

Latin American countries gained against a stalling dollar on

Wednesday, with the Chilean peso in the lead, boosted by

strength in prices of key commodities such as copper and crude

oil.

The MSCI index tracking Latam currencies

climbed 0.3% by 10:20 a.m. ET (1420 GMT) to an almost two-month

high, while the stocks gauge rose 0.6%.

The U.S. dollar held steady as traders looked past

hotter-than-expected inflation data and still expected a Federal

Reserve interest rate cut in June.

Top copper producer Chile's peso gained 1% to an over

one-month high as prices of the red metal touched their highest

level in seven months after Chinese smelters, which process half

of the world's mined copper, agreed on a joint production cut.

The currency of Peru, another top copper producer,

was also up 0.8% to a seven-month high.

The peso currencies of major oil exporters Mexico

and Colombia also climbed 0.3% and 0.2%, respectively, as

the commodity's prices spiked 2%, supported by potential supply

disruption after Ukrainian attacks on Russian refineries, signs

of strong demand and hopes that the Federal Reserve might start

cutting interest rates soon despite sticky U.S. inflation.

On the flip side, major iron ore producer and exporter

Brazil's real slipped 0.2% as the mineral's prices

declined to over six-month lows on fears of a reduction in

demand in top consumer China.

On Tuesday, Brazil's Vice President Geraldo Alckmin said in

an interview that the dollar trading between 4.9 reais ($0.9860)

and 5.0 reais is competitive and helps the country's exports.

"While a lot is happening at once in Latin America, the most

evident common trend is that the region's central banks led the

easing wave among EM, as the early tightening cycle led to

significant disinflation and allowed them to cut rates ahead of

the US Fed," Barclays analysts wrote.

"Now they have to be more careful as disinflation loses

steam."

Most Latam currencies have failed to continue their strong

performance in 2023, as markets push back the expected timeline

for U.S. rate cuts, while many of the region's central banks

continue to ease policy and economic woes in top commodities

consumer China weigh on sentiment. Chile's peso is the worst

performer within the Latam space so far this year.

Bank of Mexico Deputy Governor Omar Mejia argued in a

podcast that it is not premature to consider lowering interest

rates, though he cautioned that any future cuts should remain

restrictive.

Meanwhile, Argentina's government cleared some 42.6 trillion

Argentine pesos ($52.5 billion) in a massive $65 billion bond

swap it issued to push back debts due this year, its economy

ministry said on Tuesday.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1046.16 -0.28

MSCI LatAm 2506.58 0.63

Brazil Bovespa 128205.10 0.42

Mexico IPC 54985.31 0.16

Chile IPSA 6517.64 0.24

Argentina MerVal 0.00 0

Colombia COLCAP 1284.51 0.46

Currencies Latest Daily %

change

Brazil real 4.9813 -0.15

Mexico peso 16.7415 0.32

Chile peso 949.4 0.98

Colombia peso 3911.3 0.17

Peru sol 3.6569 0.79

Argentina peso (interbank) 849.5000 -0.06

Argentina peso (parallel) 1015 0.49