(Updates prices throughout) By Susan Mathew and Shreyashi Sanyal Aug 20 (Reuters) - Mexico"s peso dropped more than 1% to hit a two-month low on Friday, leading declines across Latin American currencies as the dollar held at 9-1/2-month highs amid global growth worries stemming from rising COVID-19 cases. The peso extended losses to a fifth straight session, taking its decline so far this week to 2.6% - its worst in two months. Mexico"s daily COVID-19 cases hit record highs on Wednesday of nearly 29,000, as the country battles a new wave of the pandemic. The official death toll, which officials say underestimates the real numbers, passed 250,000, one of the highest worldwide. The United States on Friday extended the closure of its land borders with Canada and Mexico to nonessential travel such as tourism through Sept. 21 and airline officials say it will be at least weeks and potentially months before restrictions are lifted. Currencies of resource-rich Latam economies were all set to end the week in the red following a bruising week for commodities. "Falling commodity momentum remains a headwind, and we stay in relative value territory in Latam FX going into the final stretch of the tapering discussion," said Citi strategists, referring to the U.S. Federal Reserve"s hint that it may start tapering stimulus this year. "We continue to believe that inflation pressures in emerging markets may be transitory, but receivers have to wait for less hawkishness from the regional central banks to receive." Crude exporter Colombia"s peso and top copper producer Chile"s currency were flat. Iron ore exporter Brazil"s currency hit 3-1/2-month lows earlier in the session, falling 8% since last Friday. The currency was down 2.6% this week, while Brazil 10-year bonds languished at near 3-year lows as fiscal and political headwinds gathered ahead of 2022 elections. Emerging market debt registered the first inflow in four weeks at $200 million in the week to Wednesday, BofA said in its weekly note. In equities, EM funds had the largest inflows since April at $4.3 billion. Most Latam bourses tracked Wall Street indexes higher on Friday, with Brazil"s Bovespa index rising 0.8%. The Bovespa still fell 2.4% for the week, while Mexico"s IPC index was on track to break a five-week winning streak. Key Latin American stock indexes and currencies at 1427 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1221.06 -0.92 MSCI LatAm 2368.33 0.54 Brazil Bovespa 118301.22 0.97 Mexico IPC 51406.19 0.6 Chile IPSA 4345.79 0.82 Argentina MerVal 67738.02 1.584 Colombia COLCAP 1330.44 0.06 Currencies Latest Daily % change Brazil real 5.4041 0.33 Mexico peso 20.4121 -1.27 Chile peso 786 -0.01 Colombia peso 3868 -0.04 Peru sol 4.1071 -0.33 Argentina peso (interbank) 97.3100 -0.02 Argentina peso (parallel) 179 1.40 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru Editing by Dan Grebler and Matthew Lewis) Our Standards: The Thomson Reuters Trust Principles.