November 14, 2019 / 3:27 PM / 25 days ago

EMERGING MARKETS-Latam FX weakens on growth fears, rate cut expected in Mexico

    * Chile peso hits new low as unrest goes on
    * Weak China, Germany data spark growth concerns
    * Mexico peso, Brazil real track global currencies lower
    * Brazil, Chile, Colombia stocks gain

    By Sagarika Jaisinghani and Susan Mathew
    Nov 14 (Reuters) - Mexico's peso slipped ahead of a central
bank meeting on Thursday where policymakers are widely expected
to cut rates while the Chilean peso hit a new low as widespread
anti-government protests showed no signs of abating.
    An index of Latin American currencies fell
for the ninth straight session as a sharp slowdown in China's
factory output in October and persistent weakness in Germany's
economy sparked fears of sluggish global growth.
    The Mexican peso shed 0.5% in the run up to the
meeting of the Bank of Mexico, known as Banxico. Analysts expect
it to cut the country's benchmark lending rate for the third
time this year.
    But a broad rise in longer-dated bond yields over the past
month suggests Mexico's economic outlook has improved
relatively, easing "pressure on policy makers to cut more than
25 bp today," Morgan Stanley analyst James Lord wrote in a note.
    "The recent events in the Andean region that have negatively
impacted broader LatAm sentiment could also be a factor
prompting a more cautious approach from Banxico."
    The Chilean peso hit an all-time low of 807.60 to the
dollar despite measures announced by the central bank to boost
liquidity in the financial system after weeks of often violent
social unrest. 
    The currency is on course for six straight sessions of
declines, its longest losing streak since Aug 5. But Chile's
dollar-denominated bonds strengthened after the report.

    "This program (by Chile's central bank) is better than
surprise interventions in the foreign exchange market and is
likely to soothe, to an extent, concerns regarding further peso
depreciation," Credit Suisse analyst Alonso Cervera said.
    In Brazil, the real extended losses for the third
session in a row, shrugging off data showing an acceleration in
economic activity in September and tracking global currencies
lower as weak indicators from major economies reflected the
fallout from the Sino-U.S. trade war.
    Investors have been rattled this month as few details have
emerged about a potential truce. China said on Thursday it was
holding "in-depth" talks with Washington and cancelling tariffs
was an important condition for a deal.
    The Colombian peso sank to a one-month low ahead of
third-quarter GDP figures due later in the day.
    A rise in stocks in Brazil, Chile,
Argentina and Colombia helped boost the wider
index tracking Latin American shares by 0.3%.
    
    Key Latin American stock indexes and currencies at 1449 GMT:
   
        Stock indexes                Latest    Daily % change
 MSCI Emerging Markets                1042.27            -0.15
 MSCI LatAm                           2661.06             0.27
 Brazil Bovespa                     106540.10             0.45
 Mexico IPC                                 -                -
 Chile SPIPSA                         4484.18             1.63
                                               
 Argentina MerVal                    32700.40            1.112
 Colombia IGBC                       13272.70             0.22
                                                              
           Currencies                Latest    Daily % change
 Brazil real                           4.1843            -0.35
 Mexico peso                          19.4448            -0.49
 Chile peso                             804.8            -1.01
 Colombia peso                        3448.93            -0.70
 Peru sol                              3.3908            -0.08
 Argentina peso (interbank)           59.7100             0.03
                                               
 
 (Reporting by Sagarika Jaisinghani and Susan Mathew in
Bengaluru; Editing by David Clarke)
  
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