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Bonds News

EMERGING MARKETS-Latam FX sapped by firm dollar on virus woes, Mexican peso drops 2.5%

    * Brazil's real down almost 2% 
    * UBS AM says Latam FX 'particularly attractive'
    * Brazil's car buyer Localiza surges on deal to buy rival

 (Updates prices)
    By Medha Singh and Susan Mathew
    Sept 23 (Reuters) - Mexico's peso hit a six-week low on
Wednesday and the Brazilian real extended losses for a fifth
straight session against a perky dollar amid renewed fears over
the fragile global economy's fate in the face of rising
coronavirus cases.
    MSCI's index for Latin American currencies
dropped about 2.5% after taking a breather on Tuesday from a
dire start to the week on concerns over another round of
pandemic-related business shutdowns in some European countries.
    The dollar gained while equities, including those in Latin
America, tumbled after data showing dismal
business activity in Europe was followed by a slowdown in
business growth in the United States. 
    A stalemate in U.S. Congress over more fiscal stimulus also
weighed.
    An emergency approval of one to three COVID-19 vaccines is
likely in the coming months, UBS Asset Management predicted on
Wednesday, potentially compounding U.S. dollar weakness and
helping higher-beta emerging market currencies outperform.

    The asset management arm of the Swiss bank said it prefers
equity markets outside the U.S. and that Latin American
currencies stood out as "particularly attractive".
    Focus this week is on Mexico's central bank policy statement
on Thursday where the pace of interest rate cuts is expected to
slow. 
    The peso slipped 2.5% to 22.308 against the greenback
after Mexico's confirmed coronavirus caseload rose to 705,263 on
Tuesday, with a reported death toll of 74,348.
    Meanwhile markets are divided over whether the Colombian
central bank will continue to trim its benchmark interest rate
or halt cuts to stem capital outflows, a Reuters poll showed.
    Interest rates are likely to remain low in Brazil, Chile,
Colombia, Mexico and Peru, not returning to the previous cycle's
high point in the next two years or so regardless of the
trajectory of any economic recovery, Moody's Investors Service
said.
    The Argentine peso logged another all-time low
against the dollar amid concerns over economic recovery
following the central bank's steps to tighten currency controls
and restrict already limited access to dollars last week.
    Argentine Economy Minister Martin Guzman stood by the
country's newly adopted currency controls in comments made
before Congress on Tuesday.
    Among individual stocks, Brazilian rent-a-car company
Localiza jumped 14% after it agreed to take over
rival Unidas for roughly 12 billion reais ($2.18
billion), creating a behemoth that could account for more than
10% of all cars sold in Brazil.
    Unidas shares soared over 19%.
    
    Key Latin American stock indexes and currencies at 1834 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1076.91    -0.55
                                   
 MSCI LatAm               1836.60    -3.31
                                   
 Brazil Bovespa          96368.28    -0.95
                                   
 Mexico IPC              35814.77    -0.11
                                   
 Chile IPSA               3518.73    -3.19
                                   
 Argentina MerVal        40720.39   -0.547
                                   
 Colombia COLCAP          1184.74    -0.25
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.5653    -1.76
                                   
 Mexico peso              22.2960    -2.57
                                   
 Chile peso                 781.6    -0.70
                                   
 Colombia peso            3860.19    -1.06
                                   
 Peru sol                   3.572    -0.64
                                   
 Argentina peso           75.7100    -0.08
 (interbank)                       
                                   
 
 (Reporting by Medha Singh in Bengaluru; Editing by Sandra Maler
and Jan Harvey)
  
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