March 17, 2020 / 6:45 PM / 18 days ago

EMERGING MARKETS-Brazilian, Mexican currencies hit new lows, dollar demand up amid coronavirus risk

 (Adds analyst comments, updates prices)
    By Shreyashi Sanyal
    March 17 (Reuters) - Mexico's peso and the Brazilian real
touched record lows on Tuesday as coronavirus fears worsened
risk appetite and a rush towards the most liquid currency
brought back demand for the U.S. dollar.      
    The greenback jumped 1.5% as nervous traders scurried
to its safety after a slew of central bank measures, including
interest rate cuts and billions of dollar of liquidity
injections, did little to assuage markets.
    Mexico's peso gave up early gains to trade 0.4%
lower, touching a record low of 23.2200 against the dollar.
    "Under current stress levels of global uncertainty and
market volatility, the sharp depreciation in the Mexican peso
has come on the back of a massive unwinding of carry trade flows
into the peso, even though the pandemic has not particularly hit
Mexico yet," said Olivia Alvarez Mendez, FX market analyst at
Monex Europe. 
    Brazil's real slipped 0.2% to new lows of 5.0865 per
dollar. Amid calls for earlier action, the Brazilian central
bank is expected to cut interest rates by 25 basis points to 4%
at its scheduled meeting on Wednesday.
    As the number of infections and deaths outside China
continue to rise, countries are increasingly resorting to
partial or complete shutdowns, and investors worry about the hit
to global economic activity.  
    Disappointing economic data this week from China, the United
States and Germany, have already started to show evidence of the
impact.     
    Most analysts said central banks around the world have taken
some much needed action but at this point much bigger fiscal
measures will be needed in due course to keep countries from
plunging into economic crisis. 
    Colombia's peso rose 1.9% after four sessions of
losses. Colombia will reduce its local TES bond auction tranche
for this year by 1.5 trillion pesos ($365.8 million), the
finance ministry said on Tuesday.
    Stocks in Latin America tracked Wall Street's wild swings
between positive and negative territory. 
    Brazil shares jumped 7.2%, while Chile stocks
 rose 0.1%. 
    Colombian equities reversed course to trade 0.9%
higher. Oil firm Ecopetrol slid after it cut its
planned investment for 2020 by $1.2 billion amid the virus
outbreak and an increase in global crude supply.
    Mexico's IPC index slipped 3.4% on returning from an
extended weekend as it caught up with Monday's rout. That
triggered a circuit break and the index continued its slide on
restarting.        
    Latin American stock indexes and currencies at 1829 GMT:
   Stock indexes              Latest     Daily % change
 MSCI Emerging Markets           829.72            -0.42
                                         
 MSCI LatAm                     1684.37             3.46
                                         
 Brazil Bovespa                76292.20              7.2
                                         
 Mexico IPC                    36789.99             -3.4
                                         
 Chile IPSA                     3237.52             0.16
                                         
 Argentina MerVal              25074.35           -2.425
                                         
 Colombia COLCAP                1007.08             0.93
                                         
                                                        
       Currencies             Latest     Daily % change
 Brazil real                     4.9750             1.39
                                         
 Mexico peso                    23.0220            -0.75
                                         
 Chile peso                       848.2             0.74
                                         
 Colombia peso                  4001.17             1.92
 Peru sol                        3.5428             0.25
                                         
 Argentina peso                 63.1700            -0.21
 (interbank)                             
                                         
    

 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru;
Editing by Alistair Bell and Grant McCool)
  
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