March 10, 2020 / 7:38 PM / a month ago

EMERGING MARKETS-Latam currencies claw back losses on oil rebound, stimulus hopes

    * Major Latam currencies come off lows 
    * Bets fall for Banxico rate cut 
    * Brazilian industry kicks off 2020 with solid rise 

 (Adds comments, updates prices)
    By Shreyashi Sanyal
    March 10 (Reuters) - Latin American currencies clawed back
some losses on Tuesday, a day after falling to historic lows,
fueled by a rebound in oil prices and hopes for more stimulus. 
    Currencies of Brazil, Chile and Colombia
 came off all-time lows hit last session, but still
hovered near those levels. They rose between 0.5% and 1.6%. 
    U.S. President Donald Trump on Monday promised "major" steps
to combat the virus outbreak and said he would discuss a payroll
tax cut with congressional Republicans.            
    "There's a bounce and that emanates from a feeling that
stimulus all across the board will lead to increase in global
demand and give emerging markets a break," said Juan Perez,
senior foreign exchange trader and strategist at Tempus Inc. 
    Mexico's peso traded 0.1% higher, with investors
taking comfort from the country's currency commission move to
increase foreign exchange auctions to $30 billion from $20
billion.
    Banxico, as Mexico's central bank is known, has two weeks to
decide whether to reduce lending rates for a sixth consecutive
time. The move is seen as less likely after the peso hit an
all-time low of 22.929 per dollar on Monday.
    "There's got to be more calm in exercising loose monetary
policy especially when the recessionary pressures may not have
yet manifested themselves. Cutting seems pre-emptive and
preventative and may not be the best approach," Tempus Inc's
Perez added.
    The Mexican and Colombian pesos had tumbled after Saudi
Arabia and Russia sparked an oil price war, but an 8% rebound in
crude prices on stimulus hopes soothed the market.    
    Concerns linger about a likely economic downturn as the
fast-spreading coronavirus has infected over 100,000 people.
    Brazil's Treasury has canceled this week's scheduled auction
of fixed rate bonds, citing "more restrictive financial market
conditions," it said on its website late on Monday.
    Sao Paulo's Bovespa stock index jumped 4.8% after
posting its worst day since 1998. The rebound in oil and higher
iron ore prices lifted Petrobras and Vale
 shares, respectively. 
    Adding to the optimism, data on Tuesday showed Brazilian
industry got the year off to a solid start, with output rising
in January for the first month in three and at its fastest pace
since August.
           
    Key Latin American stock indexes and currencies at 1854 GMT:
   Stock indexes            Latest     Daily % change
 MSCI Emerging Markets         963.40             1.63
                                       
 MSCI LatAm                   2093.43             4.98
                                       
 Brazil Bovespa              90215.13             4.82
                                       
 Mexico IPC                  39164.76             1.12
                                       
 Chile IPSA                   4086.34             1.26
                                       
 Argentina MerVal            32515.47             7.03
                                       
 Colombia COLCAP              1359.63             1.12
                                       
                                                      
      Currencies            Latest     Daily % change
 Brazil real                   4.6474             1.67
                                       
 Mexico peso                  20.7410             0.21
                                       
 Chile peso                     837.2             0.51
                                       
 Colombia peso                3758.39             1.25
                                       
 Peru sol                      3.5007             0.12
                                       
 Argentina peso               62.5875            -0.09
 (interbank)                           
                                       
    

 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru;
Editing by Richard Chang)
  
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