EMERGING MARKETS-Latam FX gains as dollar eases; Chile’s peso outperforms on c.bank intervention

* Chile central bank announces $25 billion FX intervention * Argentina’s central bank modifies rate strategy (Updates prices) By Susan Mathew and Devik Jain July 15 (Reuters) – Chile’s peso shot up as much as 9.8% on Friday, as the central bank intervened to lift the currency from record lows, while a pause in the dollar prompted gains in most other Latin American currencies. The Chilean currency was on track for its best session ever as the central bank agreed to a $25 billion intervention in the foreign exchange market to support the currency due to a rallying dollar, the drop in the price of copper, Chile’s main export, and “local uncertainty.” Bets about an aggressive move by the U.S. Federal Reserve this month and safe-haven appeal amid recession worries have powered the dollar to near two-decade highs. The peso breached 1,060 per dollar for the first time on Thursday and has been in record low territory for over three weeks. The central bank move lifted it to 974.2 on Friday. “$25 billion intervention in a country like Chile where GDP is not very big is remarkable. There is no doubt that this is going to be an outperformer in the aftermath of the program,” said Marcos Casarin, chief LatAm economist at Oxford Economics in Mexico. “We found the Chilean peso over 20% undervalued before this announcement, so the discount is too big. We understand their political risks revolving around the new constitution, but at the same time the fundamentals don’t look so bad.” Mexico’s peso rose 1.26% as the dollar took a breather as two of the Fed’s most hawkish policymakers said overnight they favored another 75-basis-point hike after hot U.S. inflation had raised bets of a 100 bps move this month. As oil prices recovered, crude exporter Colombia’s peso firmed 3.06% to 4349.6, further recovering from the record low of 4,658.02 hit earlier this week. Colombia’s retail sales rose 34.8% in May from a year earlier. Brazil’s real gained 0.5% in volatile trading. Stocks in the region rose 1.9%, tracking Wall Street after upbeat U.S. retail sales data allayed concerns about an imminent recession. However, Argentina’s heavily controlled peso fell 0.16%. A Bloomberg report said Argentina’s central bank held its benchmark interest rate at 52%, according to a person with direct knowledge of the matter, as inflation galloped to 64% in the 12 months to June. Meanwhile, Argentina’s central bank on Thursday announced a change in its strategy for setting the country’s interest rates, seeking to achieve positive real interest rates, which is part of its credit agreement with the International Monetary Fund. Key Latin American stock indexes and currencies at 1842 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 962.45 -0.31 MSCI LatAm 1948.99 1.9 Brazil Bovespa 96673.40 0.57 Mexico IPC 46873.16 0.28 Chile IPSA 5114.64 -0.4 Argentina MerVal 103738.92 3.204 Colombia COLCAP 1256.57 -1.25 Currencies Latest Daily % change Brazil real 5.4045 0.50 Mexico peso 20.5305 1.26 Chile peso 974.2 7.62 Colombia peso 4349.6 3.06 Peru sol 3.8994 -0.20 Argentina peso (interbank) 128.2200 -0.16 Argentina peso (parallel) 290 -0.34 (Reporting by Susan Mathew and Devik Jain in Bengaluru; editing by Jonathan Oatis and Richard Chang)