Latin American currencies slide in volatile session; investors eye APEC summit

* Brazil’s services sector hits record high in September * World leaders head to South America for summit * Mexico simplifies fiscal regime for state oil company Pemex * MSCI Latin America stock index fell 0.2%, FX fell 0.1% (Updated at 14:40 ET ) ) By Pranav Kashyap and Johann M Cherian Nov 13 (Reuters) – Most Latin American currencies edged lower against the dollar on Wednesday, but the Mexican peso bucked the trend as investors braced for upcoming budget announcements and weekly Be prepared for four possible interest rate cuts. MSCI’s index tracking Latin American currencies fell 0.1% as a U.S. inflation report highlighted the possibility of a December interest rate cut by the Federal Reserve, with the dollar torn between marginal gains and marginal losses. The dollar is near six-month highs as markets price in higher interest rates from the incoming Donald Trump administration, whose fiscal, trade and immigration policies analysts say will lead to inflation. The Mexican peso rose 0.46% against the U.S. dollar. The currency was on track to snap a three-day losing streak. On Thursday, the Mexican government will announce its 2025 budget, and investors are increasingly concerned about the country’s fiscal deficit, which is expected to soar to 5.9% this year, the highest level in decades. President Claudia Scheinbaum announced a plan to simplify state oil company Pemex’s financial system in a bid to shore up the debt-laden coffers. Investors also expect a 25 basis point interest rate cut and the release of the 2025 budget, both scheduled for Thursday. “These two factors (budget and interest rate decisions) will affect the peso in the coming months. Investors will be closely watching how Mexico performs this time and whether they will take a more cautious approach or whether they will move to continue cutting interest rates,” said Andrés Abadia, chief Latin America economist at Pantheon Macroeconomics. Meanwhile, copper exporter Peru’s Sol fell 0.63%, tracking weakness in red metal prices. The country will also host the Asia-Pacific Economic Cooperation (APEC) forum, which runs from today until November 15. While the formal agenda is focused on financing the energy transition, discussions are likely to turn to the implications of a potential Trump 2.0 presidency. Meanwhile, the Brazilian real gave up initial gains and fell 0.87% after Finance Minister Fernando Haddad said there was uncertainty about the fiscal plan announced this week. The real currency has fallen to multi-year lows against the dollar in recent weeks as the government hesitates to announce a fiscal package to curb rapid growth in mandatory spending. The local central bank sold $4 billion in a $2 auction through repurchase agreements after earlier canceling a similar scheduled operation due to technical issues. In addition, data showed that services sector activity grew stronger than expected in September, further supporting the case for the domestic central bank to raise interest rates soon. Fellow copper producer Chile’s peso was flat after three consecutive sessions of losses as crude prices fell, while oil exporter Colombia’s peso depreciated 0.78% to hit its lowest level in more than a year. On the stock market, an index tracking the region’s exchanges fell 0.3%, with Brazilian heavyweights flat. Mexico stocks fell 0.46%, heading for a fourth straight day of losses, while Colombia’s Colcap index fell 1.27% Major Latin American stock indexes and currencies: Latest daily percentage changes in Latin American market prices from Reuters Equities MSCI Emerging Markets 1093.72 -0.86 MSCI Latin America 2096.08 -0.27 Brazilian Bovespa Flat 127608.39 Mexican IPC 50858.30 -0.5 Chilean IPSA 0.7 6558.50 Argentina Merval 2045221.1 1.59 9 Colombian COLCAP 1328.56 -1.27 Currency Latest Daily Change Percentage Brazilian Real 5.80 -0.87 Mexican Peso 20.4 9 0.46 Chilean Peso 984.8 0.05 Colombian Peso 4479.25 – 0.78 Peruvian sol 3.81 -0.63 Argentine peso (interbank) 998 Argentine peso (parallel) 1,120 pesos (Reporting by Pranav Kashyap and Johann M Cherian in Bengaluru; Editing by Toby Chopra and Nick Zieminski)