May 30, 2019 / 2:03 PM / 25 days ago

EMERGING MARKETS-Latam currencies weaken as dollar hovers near 2-year highs

    By Susan Mathew
    May 30 (Reuters) - Latin American currencies weakened on
Thursday as the dollar hovered near two-year highs on demand for
safer assets after China stepped up its rhetoric in its trade
war with the United States.
    After Chinese outlets reported that China could use its rare
earths supply as leverage against the United States, a Chinese
diplomat accused Washington of "economic terrorism."
     Earlier this week, U.S. President Donald Trump said he was
not ready to strike a trade deal with China, but on Thursday he
said Washington was doing well in their talks.
    Dollar demand was higher, pressuring regional currencies,
which fell across the board. A slide in copper prices also
played a part in the Chilean currency's 0.3% fall, while
Mexico's peso slipped slightly. 
    On Wednesday, Mexico's central bank cut its 2019 economic
growth forecast for the fourth time, warning of global and
domestic risks to investment and consumer sentiment in Latin
America's No. 2 economy.
    Mexican President Andres Manuel Lopez Obrador said the
government would send the United States-Mexico-Canada Agreement
(USMCA) to the Senate on Thursday and expects the body to ratify
it.
    In Brazil, the real fell up to 0.5% before trading
steady.
    Data showed the economy contracted in the first quarter for
the first time since 2016, adding pressure to President Jair
Bolsonaro's government.
    On Wednesday, the real had firmed on optimism around
measures taken by the government to boost economic growth and on
comments by the central bank president on aims to make the
currency fully convertible in an effort to lower the cost of
cross-border trade and investment.
    Shares in Sao Paulo were finding their footing in
early trade. Consumer staple and financial stocks led gains,
while real estate shares fell. 
    
    Key Latin American stock indexes and currencies at 1333 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          993.85      0.85
                                        
 MSCI LatAm                    2669.40      0.89
                                        
 Brazil Bovespa               97160.52      0.09
                                        
 Mexico IPC                          -         -
                                        
 Chile IPSA                    4874.99     -0.04
                                        
 Argentina MerVal                    -         -
                                        
 Colombia IGBC                       -         -
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.9734      0.05
                                        
 Mexico peso                   19.1420     -0.08
                                        
 Chile peso                      706.8     -0.35
                                        
 Colombia peso                  3350.3      0.00
 Peru sol                       3.3587     -0.07
                                        
 Argentina peso                44.5200     -0.11
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Jeffrey
Benkoe)
  
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