July 23, 2020 / 1:53 PM / 22 days ago

EMERGING MARKETS-Latam FX weakens, Brazil's real comes off one-month high

    By Shreyashi Sanyal
    July 23 (Reuters) - Latin American currencies weakened on
Thursday, after record daily increases in coronavirus cases in
Brazil and Argentina left investors scurrying for safety, with
the Brazilian real coming away from one-month highs.    
    The real slipped 0.9% 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.
     
    Argentina 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.
    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 country's 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 country's core consumer
market, continues to suffer a high tally of coronavirus
infections and deaths, Moody's Investors Service said on
Wednesday.
    Chile's peso firmed 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.
    Key Latin American stock indexes and currencies;
    
   Stock indexes                Latest         Daily %
                                                change
 MSCI Emerging Markets              1079.09          0.12
                                             
 MSCI LatAm                         2102.99         -0.57
                                             
 Brazil Bovespa                   104373.52          0.08
                                             
 Mexico IPC                            0.00             0
                                             
 Chile IPSA                         3940.17         -0.12
                                             
 Argentina MerVal                      0.00             0
                                             
 Colombia COLCAP                    1168.72          0.02
                                             
                                                         
       Currencies               Latest         Daily %
                                                change
 Brazil real                         5.1595         -0.91
                                             
 Mexico peso                        22.4500         -0.41
                                             
 Chile peso                             766          0.14
                                             
 Colombia peso                      3656.25         -0.56
 Peru sol                            3.4998          0.23
                                             
 Argentina peso                     71.8300         -0.07
 (interbank)                                 
                                             
 Argentina peso                         129          2.33
 (parallel)                                  
                                             
 

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