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Brazil’s real pauses after rally, Argentine peso hit by Moody’s revision

(Updates to close) By Sruthi Shankar July 15 (Reuters) – Most Latin American currencies weakened on Monday, halting the Brazilian real’s recent run-up as investors looked for progress in the government’s pension reform bill, while the Argentine peso was hit hard by Moody’s outlook cut. The real fell about 0.5% after posting its strongest weekly gain since late May, while Sao Paulo-listed shares retreated from record highs made last week after Brazil’s lower house of Congress approved the main text of the bill. Leaders said a final vote on the bill may not take place before August, as negotiations delayed the process and reduced savings from the overhaul. “Our base case is despite the second floor vote being delayed until 6 August, the reform is on track to be approved by the Lower House by a large majority,” Wilson Ferrarezi, economist at TS Lombard, said in a note. A central bank indicator showed economic activity in Brazil rose in May, the first increase this year and an indication that the country may avoid slipping back into recession. The Mexican, Chilean and Colombian pesos made tepid moves against the dollar which advanced in thin trading. The Argentine peso slumped 2% to its weakest level in over a week after ratings agency Moody’s changed the economy’s outlook to negative from stable over the weekend, citing rising uncertainty about economic policy and risk of additional “damaging currency shocks.” Moody’s decision comes a little more than three months before the country’s elections in which President Mauricio Macri, seeking a second term, is being challenged by Alberto Fernandez, who has former populist president Cristina Fernandez de Kirchner on his ticket. Key Latin American stock indexes and currencies at 1956 GMT Stock indexes daily % Latest change MSCI Emerging Markets 1057.33 0.61 MSCI LatAm 2935.50 -0.16 Brazil Bovespa 103717.50 -0.18 Mexico IPC 43094.46 1.05 Chile IPSA 5069.95 0.03 Argentina MerVal 41348.79 -3.28 Colombia IGBC 13016.77 -0.12 Currencies daily % change Latest Brazil real 3.7560 -0.50 Mexico peso 18.9846 -0.03 Chile peso 680.5 -0.15 Colombia peso 3188.15 0.08 Peru sol 3.283 0.00 Argentina peso 42.3800 -1.83 (interbank) (Additional reporting by Agamoni Ghosh in Bengaluru; Editing by Bill Trott and Richard Chang)

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