Bonds News

EMERGING MARKETS-Brazil's real slides after rate cut; other Latam FX firm

    * 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
    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 %
 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 %
 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
 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Paul Simao and Jonathan Oatis)