*
Mexican economy up 1.1% y/y in August- preliminary
estimate
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South Africa joins easing club with 25 bps rate cut
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Turkish central bank keeps rates steady, alters guidance
*
Argentine stocks headed for record high close
*
Both Latam FX and stocks up 0.3%
(Updated at 3:25 p.m. ET/ 1925 GMT)
By Ankika Biswas and Shashwat Chauhan
Sept 19 (Reuters) - Brazil's real outpaced its regional
peers on Thursday after the central bank kicked off an interest
rate-hiking cycle and signaled more increases, while key indexes
for Latin American assets climbed after an outsized U.S. rate
cut overnight.
The real hit a one-month intraday high, strengthening
0.7% against the dollar, following an expected 25-basis-point
rate hike and as the central bank hinted at upcoming rises to
tackle a challenging inflation outlook driven by
stronger-than-expected economic activity.
The rise in the benchmark Selic interest rate for the first
time in over two years also comes in the face of the Federal
Reserve's larger-than-usual 50-bps cut in U.S. interest rates
and projections of another half-a-percentage-point cut by
year-end.
"Many market participants anticipated this move, but
some believe it could be more symbolic, helping to boost
confidence in the BCB's (Banco Central do Brasil's) commitment
to inflation control," said Albie Manderson, FX risk manager at
Deaglo.
This widens the interest rate differential between Brazil
and the U.S., likely supporting the real by attracting capital
inflows and easing inflationary pressures through lower import
prices.
"The widening interest rate differential adds further
complexity to the BCB's decision-making process. However, this
move could help temper pressures on the Brazilian real."
The real's gains helped the MSCI gauge tracking Latam
currencies to gain 0.3%, with the Colombian peso
also rising 0.2%, while Peru's sol held steady at
3.7333 per dollar.
"Depreciation of the greenback would be beneficial for
many emerging markets that carry significant levels of
dollar-denominated debt, such as Turkey and Argentina,"
economists at the Institute of International Finance wrote in a
report led by Chief Economist Marcello Estev?o.
On the data front, a preliminary estimate showed Mexico's
economy likely expanded 1.1% in August compared with the same
month a year earlier. The Mexican peso held firm at
19.305 per greenback.
The MSCI Latam stocks index was up 0.3%,
rising for the seventh straight session, led by strong gains in
Argentine stocks, which was headed for an all-time high
close.
Argentina posted an eighth consecutive primary
fiscal surplus
in August, as the government pursues stringent austerity
measures to tackle an economic crisis.
Elsewhere in emerging markets, South Africa took a measured
tone after its first rate cut in more than four years, while
Turkey held its main interest rate steady at 50% for a sixth
straight month.
The Turkish lira was last up 0.2%, while South
Africa's rand held firm at 17.53 per greenback.
Angola left its main interest rate unchanged at 19.50% after
inflation started easing last month, while Ukraine kept its key
rate unchanged at 13% for the second consecutive time.
Markets in Chile were shut for a public holiday.
Key Latin American stock indexes and currencies:
MSCI Emerging Markets 1100.04 1.13
MSCI LatAm 2275.06 0.33
Brazil Bovespa 133455 -0.22
Mexico IPC 52896.01 0.6
Chile IPSA 6323.95 -0.36
Argentina Merval 1848227.0 1.825
1
Colombia COLCAP 1314.8 0.58
Brazil real 5.4252 0.66
Mexico peso 19.305 -0.11
Chile peso 930.35 0.13
Colombia peso 4160.47 0.17
Peru sol 3.7333 0.09
Argentina peso (interbank) 962.5 0
Argentina peso (parallel) 1220 3.278688525
(Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru
Editing by Marguerita Choy)
Line of Credit 
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