(Bloomberg) -- Latin American currencies weakened on Wednesday, weighing on an overall index for emerging markets, as the dollar jumped and optimism faded over the impact of China’s stimulus measures.

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The Mexican and Colombian pesos were among the worst performers as a gauge of emerging-market currencies erased earlier gains of as much as 0.3% to trade little changed.

“The market is probably realizing that the measures are not necessarily a game changer for China growth,” said Erick Martinez Magana, a strategist at Barclays in New York.

The drop came after China’s central bank lowered the interest rate charged on its one-year policy loans by the most on record, adding to a series of stimulus measures announced on Tuesday. The latest step failed to extend a rally in commodity prices that had boosted Latin American currencies yesterday.

The Mexican peso weakened as much as 1.6% against the US dollar on Wednesday, hitting session lows as Moody’s Ratings commented that the recently approved judicial reform may directly affect the nation’s credit rating. The peso has been under pressure amid US election risks and higher political uncertainty at home.

The market is also pricing in a dovish outcome from Thursday’s central bank meeting, with Mexican policymakers expected to cut interest rates after the country’s headline inflation slowed more than expected in early September, according to Magana.

The MSCI equity index for emerging economies advanced 0.3%, extending its longest winning streak since early-July. The index continues to trade at its highest level in more than two years and is heading toward a monthly gain after closing August in the red.

Argentina’s government may combine the final two staff-level reviews of the current $44 billion IMF program into one, and then proceed with negotiations for a new program that would take about three to six months, Economy Minister Luis Caputo said, according to people with knowledge of his closed-door presentation at JPMorgan Chase & Co.’s offices in New York.

Meanwhile, Sri Lanka’s new president Anura Kumara Dissanayake dissolved the nation’s parliament with effect midnight Tuesday and called for early elections, ordering the parliamentary election to be held on Nov. 14 and for the new legislature to meet on Nov. 21. The country’s dollar bonds are among the top performers in percentage terms on Thursday, according to data compiled by Bloomberg.

Also, the International Monetary Fund’s executive board will review today its new $7 billion loan program for Pakistan after the nation arranged more than $2 billion in financing and assurances from lenders. For Bangladesh, the Washington-based lender has agreed to fast-track financial assistance.

--With assistance from Jorgelina do Rosario, Vinícius Andrade and Nicolle Yapur.

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