EMERGING MARKETS-Latam currencies, stocks slide after Brexit vote
By Bruno Federowski SAO PAULO, June 24 (Reuters) - Latin American currencies and stocks plunged on Friday after Britain voted "Leave," to exit the European Union, as global market volatility upset a week-long rally driven by expectations of a victory by the "Remain" camp. But analysts said the impact of the shock would likely be short-lived, as central banks worldwide pledged to stabilize financial markets as needed. Mexico's peso weakened by as much as 6.7 percent to a new record low at 19.5225 per dollar, before recovering about half the lost ground, supported by the prospect of central bank intervention. Many investors use the highly-liquid peso, the only currency in Latin America that trades around the clock, as a way to hedge bets on the region as a whole. Traders also used the currency as a means to speculate on the British referendum due to its high correlation with the British pound. Senior Mexican officials said on Friday the central bank is ready to act on interest rates and the sharply depreciated local peso. The central bank stopped short of taking immediate action on interest rates, but said it was opportune that the bank holds its regular rate-setting meeting next Thursday. The comments echoed statements by central bank officials in Brazil and around the world promising to take whatever measures were necessary to keep financial and currency markets functioning normally. "Once the dust settles, we think the decision is unlikely to have a sustained impact, at least for regions other than Central and Eastern Europe," HSBC analysts wrote in a client note. "It is more about major central banks such as the Bank of Japan and European Central Bank exporting negative rates and the stalling of U.S. Fed rate hikes." The Brazilian real outperformed its peers as traders remained cautiously optimistic that a new interim government will manage to approve fiscal austerity measures seen as necessary to regain investors' trust. Brazil's benchmark Bovespa stock index was the hardest hit in the region, however, falling 3 percent due to sharp drops in blue-chip stocks often used by foreign investors to bet on emerging markets. Brazilian oil company Petroleo Brasileiro SA and mining giant Vale SA both fell about 6 percent, leading losses on the index. Key Latin American stock indexes and currencies at 1430 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 806.66 -3.44 5.2 MSCI LatAm 2,130.71 -3.9 21.17 Brazil Bovespa 49,968.98 -3.09 15.27 Mexico IPC 44,913.93 -2.67 4.51 Chile IPSA 3,949.19 -1.82 7.31 Chile IGPA 19,534.34 -1.61 7.62 Argentina MerVal 13,726.91 -3.62 17.57 Colombia IGBC 9,786.78 -1.28 14.50 Venezuela IBC 13,296.72 -4.73 -8.85 Currencies Latest Daily YTD pct pct change change Brazil real 3.3695 -0.76 17.14 Mexico peso 18.8300 -3.24 -8.50 Chile peso 679 -1.52 4.52 Colombia peso 2,977.28 -2.78 6.45 Peru sol 3.3205 -1.10 2.82 Argentina peso (interbank) 14.7600 -2.10 -12.04 Argentina peso (parallel) 14.7 -0.95 -2.93 (Reporting by Bruno Federowski; editing by Brad Haynes, G Crosse)
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