February 10, 2020 / 8:32 PM / 6 months ago

EMERGING MARKETS-Colombia peso hits 2-month low as crude slides, leading Latam currencies' losses

 (Updates prices)
    By Sruthi Shankar
    Feb 10 (Reuters) - The Colombian peso touched a two-month
low on Monday, as crude prices slumped on worries of weaker
demand from China following the coronavirus outbreak, while the
Brazilian real extended its recent sell-off to touch a new
record low.
    The mood across the developing world was cautious amid fears
of a slowdown caused by the epidemic in China, a strong dollar
and battered commodity prices.
    Colombia's peso dropped 1.2% to 3454.5 per dollar,
falling for a fourth session and leading losses among Latin
American currencies, hit by oil prices that fell to their lowest
since January 2019.
    "EM currencies are in the unenviable position of being
exposed to the likely global demand fallout and associated
weakness in commodity prices," analysts at Oxford Economics
wrote in a client note.
    They cut exposure to Latin American local bonds, including
those of Brazil and downgraded the real - one of the most
sensitive currencies to the coronavirus uncertainty - to
    As of Monday, the death toll from the outbreak rose to 909,
surpassing that of Severe Acute Respiratory Syndrome (SARS),
which killed hundreds worldwide in 2002/2003. The World Health
Organization (WHO) warned that new cases outside of China could
be "the spark that becomes a bigger fire."
    The real hit a fresh record low of 4.3285 per dollar
after logging its sixth weekly drop on Friday.
    Also weighing on emerging market currencies was a stronger
dollar, which hit a four-month high against the euro, boosted by
safe-haven demand and a bullish outlook for the U.S. economy.

    In Argentina, its new government heads into do-or-die talks
this week with its biggest creditor, the International Monetary
Fund, seeking a deal to postpone debt payments while honoring a
promise to voters to not go along with painful budget cuts.

    The country's peso currency weakened against the
dollar, while the Chilean peso and the Peruvian sol
 also eased. 
    Chilean stocks fell more than 1%, with the largest
South American airline, LATAM Airlines Group, leading
the decline. The fast-spreading virus in China has hit the
travel and tourism industry around the world.
    Sao Paulo-listed shares also fell 1%, with reinsurer
company IRB Brasil Resseguros SA sliding 14% after 
asset management firm Squadra Investimentos released a new
letter to investors reiterating the company's gains may be
    Key Latin American stock indexes and currencies at 2011 GMT:
        Stock indexes                 Latest    Daily %
 MSCI Emerging Markets                 1086.40     -0.48
 MSCI LatAm                            2730.28     -0.96
 Brazil Bovespa                      112336.39     -1.26
 Mexico IPC                           44291.75     -0.24
 Chile IPSA                            4627.63     -1.26
 Argentina MerVal                     41052.31    -0.392
 Colombia COLCAP                       1647.97     -0.41
           Currencies                 Latest    Daily %
 Brazil real                            4.3228     -0.06
 Mexico peso                           18.7133      0.25
 Chile peso                              793.4     -0.34
 Colombia peso                          3454.5     -1.17
 Peru sol                               3.3928     -0.14
 Argentina peso (interbank)            60.9750     -0.32
 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Tom Brown)
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