April 28, 2020 / 2:09 PM / 4 months ago

EMERGING MARKETS-Brazil's real, Mexican peso lead recovery in Latam FX

    * Brazil stocks extend gains into second straight session
    * Mexican peso supported by strong March trade surplus
    * Chilean assets shrug off S&P outlook downgrade

    By Ambar Warrick
    April 28 (Reuters) - The Brazilian real and the Mexican peso
recovered sharply on Tuesday as investors were encouraged by
stimulus measures and talk by leaders around the world about
possibly reopening economies that have been largely shut down to
contain the coronavirus pandemic.
    Brazil's real rose more than 1.5% from record-low
levels touched last week, when the exit of a popular Brazilian
minister had raised worries of political instability in Latin
America's largest economy.
    Mexico's peso rose 1%, supported by data showing the
country had a larger-than-expected trade surplus in March.
 
    Chile's peso rose slightly, even though ratings
agency Standard & Poor's revised down the country's outlook to
negative and said a credit downgrade was possible in the next
two years.
    Latin American  currencies have been pressured by safe-haven
demand for the U.S. dollar. Dampened economic activity has also
weighed heavily on risk assets in the region.
    "In the next few months, we believe that fiscal stimulus,
equity returns, and the management of the exit strategies will
be paramount for currencies. The global laundry bin is full of
dirty shirts but the USD looks less dirty than most," wrote Mark
McCormick, global head of FX strategy at TD Securities.
    Markets were also awaiting central bank meetings in Europe
and the United States for further cues on measures to dampen
COVID-19's economic impact.
    Brazil's central bank is likely to cut interest rates
further into negative territory next week. A drop in consumer
inflation over the month to mid-April also gives the bank more
room to cut rates.
    Brazilian stocks also marked a second straight day
of recovery after plummeting last week. The Bovespa benchmark
index added about 3%.
    Chilean stocks rose 1.4%, while Colombian stocks
 gained 0.8%. Regional stocks took some support from
gains on Wall Street, on the back of strong earnings.
    The general optimism helped markets weather a slump in oil
prices. Investors were also somewhat numbed to additional
weakness in the crude market after U.S. futures touched negative
territory last week.
    
    Key Latin American stock indexes and currencies at 1347 GMT
    
 MSCI Emerging Markets          905.45                1.13
                                        
 MSCI LatAm                    1613.49                3.74
                                        
 Brazil Bovespa               80897.64                 3.4
                                        
 Mexico IPC                          -                   -
                                        
 Chile IPSA                    3876.56                 1.7
                                        
 Argentina MerVal                    -                   -
                                        
 Colombia COLCAP               1126.21                 0.9
                                        
                                                          
       Currencies             Latest      Daily % change
 Brazil real                    5.5709                1.64
                                        
 Mexico peso                   24.4310                1.00
                                        
 Chile peso                      853.2                0.74
                                        
 Colombia peso                 4046.42                0.09
 Peru sol                       3.3857                0.33
                                        
 Argentina peso                66.6300               -0.15
 (interbank)                            
                                        
 
 (Reporting by Ambar Warrick in Bengaluru)
  
Nuestros Estándares:Los principios Thomson Reuters
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