* Mexico's peso set for third straight week of gains * Brazil's real to add more than 2% for the week * MSCI Latam stock index down 0.4% By Shriya Ramakrishnan Nov 20 (Reuters) - Brazil's real eased on Friday but was set for weekly gains of more than 2% as signs of improving growth prospects for Latin America's largest economy lifted sentiment, while higher crude prices supported the currency of exporter Mexico. The real underperformed its peers in Latin America, weakening 0.6% against the dollar on the day and contributing to a 0.3% drop in a basket of regional currencies. A combination of official interest rates being slashed to a record low and growing concerns over Brazil's fiscal health have hit the real hard, making it one of the worst-performing currencies in the region this year. But the currency staged a rebound this week after the government raised its growth forecast for the year and pledged to fast track reforms to privatisation and fiscal spending. Brazil's economy minister on Thursday said the country could end this year having lost only around 300,000 formal jobs, far less than during the 2015-2016 recession. Mexico's peso advanced as much as 0.6% against the dollar, and was on track for a third consecutive weekly gain, as prospects for effective COVID-19 vaccines and hopes that OPEC and its allies will keep production in check lent support to oil prices. "MXN is a carry story pure and simple. When adjusting for both volatility and liquidity it is still the world's number one carry currency," said Christian Lawrence, senior market Strategist at Rabobank. "Any periods of rising demand for risk will see support for MXN. Domestic fundamentals don't matter at the moment." Market participants have this week largely been caught between encouraging COVID-19 vaccine developments and concerns about the damage to the global economy from increased infections and another round of shutdowns. A gauge of Latin American stocks fell 0.4% during the day, but was still set to end the week higher. Chile's peso fell 0.2% even as prices of its main export, copper, surged to their highest in 29 months on Friday. Argentina's central bank on Thursday said companies that participate in the country's natural gas production plan will have free access to the official foreign exchange market. The move opens a potential loophole in strict capital controls which have been in place since August last year, aimed at protecting foreign exchange reserves, after the collapse of the peso currency. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1204.81 0.36 MSCI LatAm 2173.80 -0.43 Brazil Bovespa 106530.74 -0.13 Mexico IPC - - Chile IPSA 4036.34 0.2 Argentina MerVal 51036.73 0.17 Colombia COLCAP 1229.11 -0.14 Currencies Latest Daily % change Brazil real 5.3428 -0.57 Mexico peso 20.1310 0.24 Chile peso 760.7 -0.24 Colombia peso 3647.86 0.00 Peru sol 3.5778 -0.06 Argentina peso (interbank) 80.3500 -0.09 (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Kirsten Donovan)
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