* Brazil central bank sees little or no room for easing * Mexican peso pares losses on auto output data * EM currencies to firm further - Reuters poll * Brazil to privatize 3-4 larges companies; Bovespa up 1.1% (Updates prices) By Shreyashi Sanyal and Susan Mathew Aug 6 (Reuters) - Brazil's real slumped on Thursday after the country's central bank slashed its key lending rate to help an economy devastated by the coronavirus pandemic, while most other Latin American currencies traded flat to higher against a steady dollar. The real fell more than 1% after the central bank cut rates by 25 basis points, as expected, to a record-low 2.00% on Wednesday, but warned there was little or no room for further monetary stimulus. Policymakers said recent economic indicators in Brazil point to a "partial recovery," but noted that uncertainty remains high, especially around the end of the year when emergency fiscal stimulus is expected to wind down. "We maintain our view that the central bank remains on hold until late first quarter or early second quarter of 2021 when it begins to slowly normalize policy," said Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities. But, given the tone of the bank, there remains the risk of further easing in Brazil, he said. Latest data showed Brazil's unemployment rate rose to a three-year high of 13.3%, as the coronavirus-fueled shock continued to inflict severe damage, particularly on the services sector. Mexico's peso pared losses after auto production edged up in July during the second full month that the key manufacturing industry has reopened following closures caused by the pandemic. A Reuters poll showed emerging market currencies are expected to rise a bit further in coming months as a sliding U.S. dollar offsets domestic economic worries from the pandemic. The Chilean peso rose for the first time in four days, up 0.6%. But the world's top copper producer's output of the red metal will likely decrease 1.2% in 2020, state copper commission Cochilco said on Thursday. Among stocks, Sao Paulo shares jumped 0.9%, in line with a strong session in Wall Street. Economy Minister Paulo Guedes said the government is set to announce the privatization of three or four large companies within the next 30 to 60 days. He did not name the companies. Ecuador negotiated a one-year grace period on a credit line from the China Development Bank that will allow the country to delay $417 million in payments, the country's finance minister said on Wednesday. The Peruvian sol and stocks traded flat after the country's president named former defense minister Walter Martos the new prime minister as part of a Cabinet reshuffle over a clash with the opposition-held Congress. Key Latin American stock indexes and currencies at 1930 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1105.99 0.27 MSCI LatAm 2041.19 -0.26 Brazil Bovespa 103755.53 0.93 Mexico IPC 37873.83 -0.07 Chile IPSA 3958.24 0.66 Argentina MerVal 50613.31 -0.747 Colombia COLCAP 1137.20 -0.07 Currencies Latest Daily % change Brazil real 5.3537 -1.15 Mexico peso 22.3810 -0.10 Chile peso 771.7 0.70 Colombia peso 3741.19 0.90 Peru sol 3.5418 0.06 Argentina peso 72.6900 -0.10 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Paul Simao and Jonathan Oatis)
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