October 21, 2019 / 8:03 PM / 7 months ago

EMERGING MARKETS-Chile markets hammered by weekend protests, other Latam FX weaken

 (Updates market prices)
    By Susan Mathew
    Oct 21 (Reuters) - Latin American currencies slipped against
a steady dollar on Monday, while Chile markets tumbled after a
state of emergency was declared in the capital city of Santiago
following violent protests over the weekend. 
    Chile's peso shed as much as 2.4% to 727.33 per
dollar and was on course to log its biggest one-day drop in more
than 6 years, while stocks sank almost 5% in what could
be their worst day in about two years. 
    The military was put in charge of security in Santiago after
youth protests against fare hikes on public transport
implemented earlier this month turned to vandalism and arson.
President Sebastian Pinera later extended emergency rule to
cities to the north and south of the capital.
    Chile's finance minister Felipe Larrain said on Monday that
the civil unrest will "undoubtedly" have an impact on the
    "The events were entirely unexpected and should lead to a
weaker CLP in the near term," analysts at Citigroup wrote in a
note. "We don't expect the weakness to sustain unless the
situation deteriorates much further."
    While Citi Economics differs from market expectations of a
cut in interest rates by Chile's central bank on Wednesday, the
risk of one has certainly increased after the unrest, they said.
    Workers at BHP's Escondida copper mine in Chile - the
world's largest - said they would hold a day-long strike on
Tuesday in a show of solidarity. Copper prices shot up
on the London Metals exchange.
    Brazil's real slipped 0.4% with the final Senate vote
on the government's pension reform bill expected to take place
on Tuesday. 
    The reform is seen as crucial to reducing Brazil's primary
deficit and spurring a recovery in the sluggish economy. If the
bill wins Tuesday's vote, that will clear the way to passing the
bill into law.
    The real has seen volatility for months as the bill made its
way through houses of parliament after President Jair
Bolsonaro's administration introduced it upon taking office in
    Lower oil prices pressured crude exporter Colombia's
currency, while Mexico's peso fell 0.1% but
hovered near 2-1/2 month highs as broader market sentiment was
buoyed by trade optimism.
    Over the weekend, Chinese Vice Premier Liu He said Beijing
will work with Washington to address each other's concerns on
trade issues.
    Most stocks in the region inched higher, tracking a rise on
Wall Street.
    While banks and steel companies dragged Sao Paulo-listed
shares higher, education company Yduqs, up
3.6%, was among the top gainers on the index on news it bought
Adtalem Global Education Inc's local assets for 1.92
billion reais ($467 million).    
    Key Latin American stock indexes and currencies at 1931 GMT:
        Stock indexes                  Latest       Daily %
 MSCI Emerging Markets                    1028.75        0.46
 MSCI LatAm                               2712.81        0.06
 Brazil Bovespa                         105766.53        0.99
 Mexico IPC                              43363.51        0.43
 Chile IPSA                               4953.20       -4.61
 Argentina MerVal                        32367.51       1.248
 Colombia IGBC                           12854.59        0.17
           Currencies                  Latest       Daily %
 Brazil real                               4.1340       -0.37
 Mexico peso                              19.1239       -0.12
 Chile peso                                 725.6       -2.29
 Colombia peso                               3447       -0.65
 Peru sol                                  3.3368       -0.02
 Argentina peso (interbank)               58.4900       -0.24
 (Reporting by Susan Mathew in Bengaluru;
Editing by Chizu Nomiyama and Sonya Hepinstall)
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