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Treasury minister's resignation, sovereign rating cuts hit Argentina


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Treasury minister's resignation, sovereign rating cuts hit Argentina

* S&P Global Ratings and Fitch Ratings downgraded Argentina's credit rating further into junk territory, citing market turmoil caused by President Mauricio Macri's defeat in primary elections. S&P lowered the country's long-term foreign and local currency sovereign credit ratings to B- from B, with a negative outlook, while Fitch cut the long-term foreign and local currency issuer default ratings to CCC from B and the short-term ratings to C from B.

* Nicolás Dujovne resigned as Argentina's treasury minister Aug. 17, a day after two rating agencies downgraded the country further into junk territory over market turmoil caused by President Mauricio Macri's defeat in primary elections. Dujovne said in his resignation letter that Macri's management team needs "significant renewal in the economic area" and that his resignation is coherent with a government that "listens to the people and acts accordingly." Macri named Hernán Lacunza, who previously served as economy minister for Buenos Aires, to succeed Dujovne as treasury minister.

* The Argentine peso weakened 17.58% in the week ended Aug. 16 and has fallen nearly a third against the U.S. dollar so far in 2019, Reuters reported. Argentina's Merval stock index declined 45% in dollar terms during the five days through Aug. 16, while bond prices fell around 30%, Bloomberg News reported.


* Analysts believe the Mexican central bank's recent rate cut of 25 basis points will do little to stimulate economic growth this year, Reuters reported. It will probably take more than a year for the monetary policy decision to have a noteworthy impact on the economy, said Sergio Kurczyn, a senior economist at Citibanamex. Mexican President Andres Manuel Lopez Obrador, meanwhile, said the reduction "is important because it stimulates growth."

* Banco de México Governor Alejandro Díaz de León said the bank's recent rate cut does not necessarily represent the start of a monetary easing cycle, El Financiero reported. The central bank earlier in August lowered its benchmark interest rate by 25 basis points to 8.00%, marking its first rate reduction in more than five years, after narrowly avoiding a technical recession in the second quarter.

* Spanish financial software producer Latinia will invest between $3 million and $4 million in three Mexican financial technology firms, El Financiero reported, citing Oriol Ros, Latinia's global marketing director. The three Mexican fintechs are Dapp, Prestanomico, Sociedad Anonima Promotora de Inversion, de Capital Variable and Tu identidad.

* Large credit unions in Mexico, known locally as sofipos, will eventually be regulated in the same way as banks, El Economista reported. Anselmo Moctezuma Martínez, vice president of popular finance and development banking at Mexican banking and securities commission CNBV, said upcoming regulation for sofipos will be based on their business model and size, adding that some sofipos have more customers and assets than banks.


* Analysts believe that the Brazilian central bank's recent announcement of U.S. dollar sales on the spot market for the first time in 10 years indicates that it is finally open to reducing its foreign exchange reserves stockpile of $385 billion, Reuters reported. "This is a change of tactic, as well as signaling that there is no problem with selling FX reserves as long as it is a measured sale," said Cleber Alessie Machado, a broker at H. Commcor.

* Regional economic data recently released by Brazil's central bank suggests that Latin America's largest economy is growing, Estadão reported. At the same time, credit in the country grew 5.4% during the last 12 months, the central bank said.

* Brazilian authorities seized various personal assets of Claudio Oliveira, the owner of Bitcoin Banco Cryptocurrency, following a court order, Valor Econômico reported. The order was issued as part of a lawsuit filed by Bitcoin Banco clients who are reportedly owed 13 million reais.

* The regulator of Brazil's B3 stock exchange has imposed a small fine on XP Investimentos Corretora de Câmbio Títulos e Valores Mobiliários SA for violating rules related to the prioritization of certain sales orders, Valor Econômico reported.

* Payment processors PagSeguro Digital Ltd. and Stone Pagamentos SA have fueled their growth and stock performance by expanding the range of products they offer, including banking services that were outside the scope of their initial payments business, Valor Econômico reported.


* Argentines withdrew over $700 million from their bank accounts, or 2.3% of total dollar deposits in the financial system, between Aug. 12 and Aug. 13, Bloomberg News reported. This was the largest two-day withdrawal in more than five years, reflecting fears of a run against financial institutions.

* Alberto Fernandez, the opposition candidate in upcoming Argentine elections, said he will look to renegotiate the repayment terms of loans the country has obtained from the International Monetary Fund, Reuters reported. "I would say that there is only one incontrovertible reality and that is that Argentina in these conditions is not able to repay the debts it took on," Fernandez was quoted as saying.

* Banco Santander Chile is testing a new payment app called One FX with hopes of challenging the dominance of rival Banco de Credito e Inversiones SA's MACH offering, Diario Financiero reported.

* Banco de Chile plans to close 33 branches of consumer banking division Banco CrediChile in 2019, corresponding to 8.6% of the division's total branch network in Chile, Diario Financiero reported. The planned closures are part of a digital transformation plan that will also see another 13 CrediChile branches merge with those of Banco de Chile.


* Asia-Pacific: China revises loan prime rate mechanism; Malaysia eases forex policy

* Middle East & Africa: Bahrain's Al Salam Bank denies merger rumors; Africa growth risks increasing

* Europe: Leaked Brexit crisis plan; ECB clears Carige rescue; NatWest data breach

Helen Popper contributed to this article.

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