SAO PAULO/BUENOS AIRES, May 11 (Reuters) - Argentina's peso tumbled to a record low against the dollar on Friday, causing the central bank to intervene in the spot market for a second straight day, as talks for an International Monetary Fund financing line failed to calm traders.
On Thursday, IMF Director Christine Lagarde said she instructed her team to continue discussions regarding a fund-supported program for Argentina following an extremely rocky few weeks for the peso. Since March, the peso has slid over 10 percent. In May alone, the currency has registered intraday slides of over 5 percent and gains of over 2 percent.
The Argentine government has hiked the benchmark interest rate some 1,275 basis points in recent weeks and announced it would seek a so-called "high access stand-by" agreement from the IMF to stabilize the country's economy.
While rhetoric has been sanguine, there are no concrete commitments as of yet.
The Argentine central bank intervened in the spot market for the second consecutive day on Friday, but that did not stop the peso's slide. The currency was trading down 4.18 percent in afternoon trade.
Investors "are continuing to unwind their positions (in peso-denominated assets) to dollarize (their portfolios)," said a Buenos Aires-based trader. "The central back had to sell dollars once again, but they were absorbed by the market immediately and the exchange rate didn't fall." Across Latin America, some other major markets saw their currencies weaken over 1 percent as well.
In Brazil, the real currency was trading down 1.31 percent against the dollar. Traders said they were adopting defensive positions ahead of a new presidential election poll.
"Markets are hoping for a candidate with a reformist vision rising in the polls, which hasn't happened yet," wrote brokerage Advanced Corretora in a report.
In Mexico, the peso fell 1.02 percent after Mexican Economy Minister Ildefonso Guajardo said the nation would not be rushed into a poor North American Free Trade Agreement deal and that plenty of issues with the negotiations were outstanding.
Key Latin American stock indexes and currencies at 1537 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1164.07 0.65 -0.16 MSCI LatAm 2869.76 -0.61 2.1 Brazil Bovespa 85668.03 -0.22 12.13 Mexico IPC 46580.17 0.06 -5.62 Chile IPSA 5715.36 0.09 2.71 Chile IGPA 28887.86 0.24 3.24 Argentina MerVal 29579.22 -0.07 -1.62 Colombia IGBC 12378.52 0.16 8.86 Venezuela IBC 19713.20 6.85 1460.65 Currencies daily % YTD % change change Latest Brazil real 3.5933 -1.31 -7.79 Mexico peso 19.4185 -1.02 1.44 Chile peso 618.7 0.79 -0.65 Colombia peso 2827.61 -0.09 5.46 Peru sol 3.265 0.03 -0.86 Argentina peso 23.7000 -4.18 -21.52 (interbank) Argentina peso 23.7 -1.69 -18.86 (parallel) (Reporting by Gram Slattery in Sao Paulo and Walter Bianchi in Buenos Aires; Editing by David Gregorio)