March 18, 2020 / 2:04 PM / 15 days ago

EMERGING MARKETS-Most Latam currencies tumble to new lows as stocks dive

    * Currencies of Mexico, Brazil, Chile touch new lows
    * Chile stocks slide 5%, Bovespa tanks 7.2%
    * Brazil govt seeks state of emergency
    * Brazil cenbank rate decision awaited; 25 bps cut expected
    * Credit Suisse sees Mexico, Chile most impacted by pandemic

    By Susan Mathew
    March 18 (Reuters) - Mexico's peso slumped 4% on Wednesday
and other Latin American currencies plunged as the extent of
economic impact from the coronavirus pandemic dominated
investors' worries.
    Regional stocks also tanked as Wall Street returned to the
red after clawing back some of Monday's steep losses after
Washington proposed a $1.2 trillion stimulus package.
    Brazilian shares sank 7.2% to near 2-1/2 year lows,
while Chile's main index slid 5% to lows not seen
since 2009.            
    Despite central bank and government interventions, fears of
recession remained with disappointing data from around the globe
evidencing the impact of decreased activity due to containment
    Brazil sought authorization to declare a state of emergency
till Dec. 31 to allow it to scrap fiscal targets and free up
funds to combat the crisis.
    The real currency fell 2.3% to 5.2070 against a
resurgent dollar. Investors will be watching for the
central decision on interest rates due later in the day. A
Reuters poll shows the bank is expected to cut rates by 25 basis
points to a new low of 4%.
    "It remains to be seen to what extent it signals its
willingness to take further steps," said You-Na Park-Heger, an
analyst at Commerzbank. "In the end, it might become clear today
that monetary policy scope in Brazil is limited." 
    But TD Securities sees the monetary policy committee holding
rates and focusing on foreign exchange intervention and
volatility management while the currency adjusts to a new
    "The balance of payments situation is unconstructive for
BRL, and with the added terms-of trade shock we see further
weakness, regardless of central bank rate policy," wrote Sacha
Tihanyi, deputy head of emerging markets strategy at TD
    UBS on Wednesday slashed its forecast for Brazil's 2020
economic growth to 0.5% from 1.3% last week.
    As oil prices tanked, crude exporter Colombia's peso
gave up 3% to hover near all-time lows, while Mexico's peso
 touched 24.067 to the dollar.
    Credit Suisse analysts said they see Mexico and Chile being
hurt the most from the pandemic due to their dependence on the
United States and China, respectively.
    Chile's currency slipped 1.4% hurt also by a slide in
price of its main export item, copper.
    In Argentina, the government on Tuesday rolled out tax
breaks and higher state spending on infrastructure to protect
the country's already vulnerable economy from the pandemic's
    Key Latin American stock indexes and currencies at 1347 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets     790.54    -4.37
 MSCI LatAm               1530.67    -7.25
 Brazil Bovespa          69226.52    -7.22
 Mexico IPC                     -        -
 Chile IPSA               3106.36    -5.04
 Argentina MerVal               -        -
 Colombia COLCAP           966.62    -3.39
      Currencies          Latest   Daily %
 Brazil real               5.1215    -2.38
 Mexico peso              23.9200    -4.11
 Chile peso                 859.9    -1.36
 Colombia peso            4112.85    -2.82
 Peru sol                  3.5698    -0.76
 Argentina peso           63.2000    -0.03
 (Reporting by Susan Mathew in Bengaluru; editing by Nick
Nuestros Estándares:Los principios Thomson Reuters
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