July 23, 2020 / 7:19 PM / 20 days ago

EMERGING MARKETS-Brazil leads Latam losses after record rise in coronavirus infections

    * Brazil's real comes off one-month high
    * Chilean stocks up as pension withdrawal bill approved
    * Weak oil prices hurt Mexican, Colombian pesos

 (Adds details, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    July 23 (Reuters) - Brazil's real led Latin American
currencies lower on Thursday after record daily increases in
coronavirus cases and Argentina left investors scurrying for
safety.
    The real slipped 1.5% against the dollar, while
Argentina's peso also weakened as the total number of
cases in Latin America passed 4 million, underlining the
difficulty the region is facing in controlling the pandemic.

    Currencies of oil-exporters Mexico and Colombia
 fell as crude prices slipped on concerns about rising
U.S. oil inventories.
    The Mexican peso will be on the radar for investors ahead of
next month's meeting of the central bank, also known as Banxico.
    Data showed Mexican inflation gained speed in the first half
of July, pushing up from the central bank's 3% target and
potentially limiting how much room policymakers have to further
cut rates.
    "Policymakers are likely to focus on the persistent weakness
of activity instead, so we continue to expect another 50bp rate
cut at the next Banxico meeting in August," said Nikhil
Sanghani, assistant economist at Capital Economics. 
    Consumer spending in Mexico is unlikely to pick up before
year's end as the Mexico City area, the core consumer market,
continues to suffer a high tally of coronavirus infections and
deaths, Moody's Investors Service said on Wednesday.

    Discouraging employment data from the United States also
undercut sentiment for the day, as a recovery in the jobs market
appeared to be stalling.
    Losses on Wall Street spilled over into the region, with
Brazilian stocks leading losses.
    Tax revenue in Brazil fell to a 16-year low in June as the
coronavirus severely crimped economic activity.
    Argentine stocks fell about 1.6%.
    The Argentine government could cede ground to creditors on
key legal terms as it looks to strike a deal to restructure
around $65 billion in foreign debt, but the government will not
increase overall cash flow in the payout, two sources told
Reuters.
    Chilean stocks bucked the trend, rising 1.5% after
Chile's Congress on Thursday gave its final approval to a bill
that allows citizens to withdraw 10% of their pension savings to
help ease the economic pain wrought by the coronavirus outbreak.

    Losses in Chile's peso were somewhat mitigated as
prices of its main export, copper, rose as available stockpiles
in London Metal Exchange (LME) warehouses tumbled to a fifth of
their level two months ago.
    Latin American stock indexes and currencies:
    
    Stock indexes             Latest       Daily % change
 MSCI Emerging Markets         1075.59                  -0.2
                                        
 MSCI LatAm                    2061.76                 -2.52
                                        
 Brazil Bovespa              102583.38                 -1.64
                                        
 Mexico IPC                   37288.33                 -0.42
                                        
 Chile IPSA                    4001.08                  1.42
                                        
 Argentina MerVal             47803.44                -1.708
                                        
 Colombia COLCAP               1182.82                  1.22
                                        
                                                            
       Currencies             Latest       Daily % change
 Brazil real                    5.1882                 -1.46
                                        
 Mexico peso                   22.4766                 -0.53
                                        
 Chile peso                      769.4                 -0.30
                                        
 Colombia peso                 3667.92                 -0.88
 Peru sol                       3.5178                 -0.28
                                        
 Argentina peso                71.8300                 -0.07
 (interbank)                            
                                        
 
    

 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Andrea
Ricci and Grant McCool)
  
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