January 3, 2020 / 3:17 PM / 7 months ago

EMERGING MARKETS-Chilean, Mexican pesos hit 2-week lows as Middle East tensions grip

    By Shreyashi Sanyal
    Jan 3 (Reuters) - The Chilean and Mexican pesos slid to
two-week lows against the dollar as investors turned risk averse
after a U.S. air strike in Iraq killed a top Iranian commander,
causing tensions to flare in the Middle East. 
    Major-General Qassem Soleimani, head of Iran's elite Quds
Force, died in a strike on Baghdad airport, prompting Iran's
Supreme Leader Ayatollah Ali Khamenei to vow harsh revenge.

    "It (Iran) would certainly have to weigh the risk of a
significant military conflict with the U.S., a possibility that
market participants may now have to take into account," Elwin de
Groot, head of macro strategy at Rabobank wrote in a note. 
    MSCI's index for Latin American stocks fell
0.6%, while currencies in the region dropped
    A cooling of trade tensions between the United States and
China had helped raise demand for riskier Latin American assets,
with the equity index poised to register its fifth straight week
in the black.
    The Latin American currencies index, on the other hand, is
set to snap a four-week winning streak as it eyed a flat end to
the week. 
    Chile's peso was 1.1% weaker at 761.65 to the dollar,
its softest level since Dec. 16. Mexico's peso weakened
to 19.036 to the dollar.   
    Mexico's creditworthiness came under increasing scrutiny in
2019, with two rating agencies flipping their sovereign outlook
for the country to negative and one downgrading its rating.
    Investors are now worried that Mexico and state-run oil
company Pemex could risk downgrades in 2020.
    The Brazilian real slipped on Friday. Data showed on
Thursday, Brazil's trade surplus shrank 20% to $46.67 billion
last year, as upwardly revised exports in recent months failed
to mask a widespread slump in overseas demand for Brazilian
goods over the course of 2019.    
    Key Latin American stock indexes and currencies at 1453 GMT:
 Stock                           Latest     Daily % change
 MSCI Emerging Markets           1124.11    -0.35
 MSCI LatAm                      2965.57    -0.61
 Brazil Bovespa                  118188.39  -0.32
 Mexico IPC                      44290.39   -0.33
 Chile IPSA                      4765.44    -0.81
 Argentina MerVal                40696.47   -0.99
 Colombia IGBC                   1651.05    -0.47
 Currencies                      Latest     Daily % change
 Brazil real                     4.0463     -0.53
 Mexico peso                     18.9046    -0.38
 Chile peso                      758.8      -1.07
 Colombia peso                   3266.57    -0.54
 Peru sol                        3.3098     -0.33
 Argentina peso (interbank)      59.8150    0.00
 (Reporting by Shreyashi Sanyal in Bengaluru)
Nuestros Estándares:Los principios Thomson Reuters
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