August 30, 2018 / 4:11 PM / a year ago

EMERGING MARKETS-Argentine peso drops 10 pct even after rate hike

    By Bruno Federowski
    BRASILIA, Aug 30 (Reuters) - The Argentine peso plummeted 10
percent on Thursday even after bouncing off its session low when
the central bank yanked up interest rates, and the latest day of
the currency's sell-off drove widespread losses across emerging
market assets.
    The bank lifted rates to 60 percent from 45 percent in a bid
to control inflation running at more than 31 percent as the
currency reaches new all-time lows on a daily basis.
    The moves came a day after the International Monetary Fund
(IMF) called for stronger monetary and fiscal policies in
response to the meltdown of the peso, which has lost 52.2
percent of its value against the greenback so far this year.
    Despite signing a $50 billion standby financing deal with
the IMF earlier this year, President Mauricio Macri is
struggling to convince the markets that he can spur economic
growth while he cuts fiscal deficits and combats inflation.
    The peso fell as much as 15.6 percent on Thursday to a
record low, by far the largest decliner amid weaker Latin
American currencies. Still, the benchmark Merval stock index
 rose 2.1 percent, driven by export-oriented firms which
would benefit from a lower peso.
    In Latin America, the Brazilian real was the second
biggest decliner as it also suffered the effect of growing
concerns over the October presidential elections.
    A string of voter intention polls have shown business
favorite Geraldo Alckmin stuck in the single-digits. Jailed
former president Luiz Inácio Lula da Silva has consistently led
the ballot, followed by far-right lawmaker Jair Bolsonaro.
    Key Latin American stock indexes and currencies at 1520 GMT:
 Stock indexes                              daily %     YTD %
                                             change    change
 MSCI Emerging Markets             1070.53    -0.01     -7.59
 MSCI LatAm                        2510.69     0.29    -11.23
 Brazil Bovespa                   77349.19    -1.33      1.24
 Mexico IPC                       49663.93    -1.04      0.63
 Chile IPSA                        5271.40     -0.5     -0.50
 Argentina MerVal                 25935.22     2.11    -13.74
 Colombia IGBC                    12246.19     0.02      7.70
 Currencies                                 daily %     YTD %
                                             change    change
 Brazil real                        4.1852    -1.71    -20.83
 Mexico peso                       19.1425    -1.00      2.91
 Chile peso                          676.7    -1.39     -9.17
 Colombia peso                     3022.32    -0.80     -1.33
 Peru sol                            3.293     0.00     -1.70
 Argentina peso (interbank)        37.9000   -10.03    -50.92
 Argentina peso (parallel)           34.05    -2.20    -43.52
 (Reporting by Bruno Federowski; Editing by David Gregorio)
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