* Colombia's public debt could climb the equivalent of 10% of GDP * EM economies and markets running on fumes - SocGen * Political uncertainty weighs on Peru's sol * Brazil, U.S. central bank meetings eyed this week (Adds details, updates prices) By Susan Mathew and Ambar Warrick Sept 14 (Reuters) - Latin American currencies firmed against a weaker dollar on Monday, while regional stocks were set for their best day in two weeks in tandem with a recovery on Wall Street. The dollar slipped ahead of the U.S. Federal Reserve's policy announcement on Wednesday, while U.S. stocks rose in anticipation of a continued accommodative stance from the central bank. The MSCI's index of regional stocks rose more than 2%, while Mexico's peso was at its highest level since early-March. A central bank meeting in Brazil and minutes of Chile's last rate meeting are also awaited this week, with both banks expected to keep interest rates at low levels to tide their economies through the coronavirus pandemic. While several emerging market currencies have recovered from pandemic-driven lows, doubts persist over the economic strain faced by the developing world, and whether a swift recovery is in order. Scope for further policy accommodation by emerging market central banks may be dwindling, analysts at Societe Generale wrote in a note. "EM is running on fumes, suggesting downside risks exceed upside potential," they said. "EM now sorely lacks a compelling impetus for investment, with growth drivers weak and yield compensation low. ... EM currencies are running on empty without capital inflows or a resounding macro narrative." Colombia's public debt could climb the equivalent of 10% of gross domestic product this year due to the coronavirus pandemic, the country's comptroller said on Friday, warning that this could affect efforts to reduce poverty and unemployment. The Colombian peso was slightly stronger, while stocks dropped 0.8%. Brazil's real rose 1.2%. Data showed economic activity continued to rebound in July, but at a much slower pace than expected. On Wednesday, Brazil's central bank will likely keep its benchmark rate unchanged and adopt a neutral view, a Reuters poll showed. The real remains one of the worst-performing EM currencies this year. Amid worries about Brazil's fiscal standing, Economy Mister Paulo Guedes on Monday said the government will break its spending cap rule at some point unless mandatory spending tied to inflation is de-indexed. Peru's sol was flat after Congress approved a motion to start impeachment proceedings against Peruvian President Martin Vizcarra over leaked audio tapes and alleged ties to a singer involved in a fraud case. "(The political uncertainty) will likely erode further business sentiment and investment prospects, which may have negative consequences in the much-needed economic recovery," said Credit Suisse analyst Alberto J. Rojas. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1104.56 1.17 MSCI LatAm 2012.78 2.16 Brazil Bovespa 100276.67 1.95 Mexico IPC 37012.44 1.86 Chile IPSA 3711.59 -0.03 Argentina MerVal 44620.49 -2.66 Colombia COLCAP 1202.67 -0.81 Currencies Latest Daily % change Brazil real 5.2708 1.17 Mexico peso 21.0860 0.86 Chile peso 765.1 0.69 Colombia peso 3689.63 0.39 Peru sol 3.5598 0.33 Argentina peso 75.1100 -0.27 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Andrea Ricci and Jonathan Oatis)
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