June 11, 2020 / 2:03 PM / a month ago

EMERGING MARKETS-Mexico's peso slides as oil tumble adds to Fed's grim view

    * Mexican peso set for worst day since April 15
    * Industrial production in Mexico falls 25% in April
    * Brazil markets closed for holiday

    By Susan Mathew
    June 11 (Reuters) - Tumbling oil prices pushed Mexico's peso
2.6% lower on Thursday to lead declines among Latin American
currencies after the U.S. Federal Reserve's dour assessment of
an economic recovery sapped risk appetite. 
    The dollar surged on safe-haven demand after the Fed said
the impact of the coronavirus pandemic will be felt for years,
quashing hopes of a quick recovery. It promised to keep pumping
liquidity into markets, but expects the U.S. economy to shrink
6.5% this year.
    Along with worries about a record build-up in U.S. crude
inventories, oil prices slumped more than 6%, weighing on
currencies of crude exporters in emerging markets such as Mexico
, Colombia and Russia.
    The Mexican peso was on track for its biggest daily drop in
nearly two months. Data showed industrial output fell 25.1% in
April from March and was 29.3% lower year-over-year.

    "Although this (data) may mark the bottom for industry, it
will add pressure for policymakers to respond with additional
stimulus measures to dig Mexico's economy out of this hole,"
said Capital Economics in a note, as the country faces its
deepest recession in decades. 
    Colombia's peso looked to post its sharpest
percentage fall in almost three months, and as oil major
Ecopetrol slid over 5%, the country's main stock index
 skidded almost 3% for its worst session in seven
weeks. 
    Sliding copper prices weighed on Chile's peso which
weakened 1.4%. Chilean stocks retreated from
three-month highs, down 2.8%, in line with Wall Street's move
lower as fears of a second wave of the virus in the United Sates
added to worries.
    Brazil markets were closed for a holiday. 

    Key Latin American stock indexes and currencies at 1339 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     994.40    -1.79
                                   
 MSCI LatAm               2003.57    -2.43
                                   
 Mexico IPC                     -        -
                                   
 Chile IPSA               3949.88    -2.81
                                   
 Argentina MerVal               -        -
                                   
 Colombia COLCAP          1144.56    -2.84
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Mexico peso              22.4600    -2.68
                                   
 Chile peso                 784.7    -1.57
                                   
 Colombia peso            3743.86    -1.97
                                   
 Peru sol                  3.4428    -0.52
                                   
 Argentina peso           69.3100    -0.07
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Bernadette
Baum)
  
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