SAO PAULO: Brazil's real fell on Monday as markets factored in an interest rate cut expected later in the week, with other Latin American currencies following suit amid surging coronavirus cases in the region.

Most currencies retreated after strong gains in July, where hopes of a Covid-19 vaccine and better commodity prices had supported buying.

The real fell about 1.7%, ahead of a central bank meeting on Wednesday where the bank is expected to cut rates further into record-low territory, as it continues to try and mitigate the impact of the Covid-19 pandemic.

Argentina's peso fell vs. the dollar after the country's largest province extended the deadline on its debt renegotiation with creditors to the middle of August, as the national government debates whether to extend a similar cutoff on its far larger and closely watched $65 billion bond revamp.

Mexico's peso was among the worst performers for the day, while Colombia's peso also retreated on recent weakness in oil prices.

Chile's peso sank in tandem with the prices of copper, the country's largest export. Data showed that Chile's economic activity fell 12.4% in June from the same month a year ago, the central bank said, surpassing expectations of an even more severe contraction amid the peak of the coronavirus outbreak.

Brazilian stocks were flat, with most other bourses in the region falling as sentiment was undercut by concerns over the US economy, ahead of crucial payroll data on Friday. Markets were also watching for any progress in discussions over fresh US stimulus measures.

Latin America's largest economy appeared to be recovering steadily from the shock of the pandemic, with data showing that manufacturing activity expanded at a record pace in July.