March 17, 2020 / 2:22 PM / 21 days ago

EMERGING MARKETS-Brazil's real hits new lows, Mexican peso recovers

    By Susan Mathew
    March 17 (Reuters) - Mexico's peso firmed after posting its
worst day in 3-1/2 years, while most Latin American currencies
weakened in volatile trade on Tuesday as coronavirus fears
worsened risk appetite and kept the dollar well bid. 
    The greenback's rally gathered steam as nervous traders
rushed to buy the most liquid currency as a slew of central bank
measures, including interest rate cuts and billions of dollar of
liquidity injections, did little to assuage markets.
    As the number of infections and deaths outside China
continue to rise, countries are increasingly resorting to
partial or complete shutdowns, and investors worry about the hit
to global economic activity. Wall Street stocks had their
steepest fall since 1987 on Monday. 
    Disappointing economic data this week from China, the United
States and Germany, have already started to show evidence of the
impact.
    "The 'just buy the dip' mentality that seemed so pervasive
in the last few weeks has now transitioned to 'just sell the
rallies'," said Ned Rumpeltin, European head of FX strategy at
TD Securities.
    Central banks have taken some much needed action and at this
point much bigger fiscal measures will need to be delivered in
due course to keep countries from plunging into crisis, he said.
    Brazil's real slipped 1.5% to new lows of 5.0865 per
dollar. Amid calls for earlier action, the country's central
bank is expected to cut interest rates by 25 basis points to 4%
at its scheduled meeting on Wednesday.
    After trading lower during Asian and early European hours,
Mexico's peso jumped 1%, coming off its lowest level
ever.
    Colombia's peso also rose half a percent after four
sessions of losses. Colombia will reduce its local TES bond
auction tranche for this year by 1.5 trillion pesos ($365.8
million), the finance ministry said on Tuesday.
    Stocks in the region tracked Wall Street's wild swings
between positive and negative territory, 
    Brazil shares gave up early gains to trade flat,
while Chile stocks jumped 2%, looking to post their
biggest one-day gain in two week. 
    Colombian equities slipped as oil firm Ecopetrol
 slid after it cut its planned investment for 2020 by
$1.2 billion amid the virus outbreak and an increase in global
crude supply.
    Mexico's IPC index tumbled 7% on returning from an extended
weekend as it caught up with Monday's rout. That triggered a
circuit break and the index continued its slide on restarting.  
 
    
    Key Latin American stock indexes and currencies at 1402 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     817.90    -1.83
                                   
 MSCI LatAm               1572.86    -3.39
                                   
 Brazil Bovespa          70870.09     0.04
                                   
 Mexico IPC              35373.10    -7.12
                                   
 Chile IPSA               3300.51     2.11
                                   
 Argentina MerVal               -        -
                                   
 Colombia COLCAP           992.81     -0.5
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.0692    -0.49
                                   
 Mexico peso              22.8550    -0.02
                                   
 Chile peso                 857.1    -0.30
                                   
 Colombia peso            4053.57     0.60
                                   
 Peru sol                  3.5537    -0.06
                                   
 Argentina peso           63.1200    -0.13
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell)
  
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