EMERGING MARKETS-Latam FX cheered by slowing coronavirus toll; Brazil's real leads
By Ambar Warrick
April 6 (Reuters) - Latin American currencies firmed on Monday, coming off four-year lows as optimism over a slowdown in coronavirus-related deaths and new cases eased some selling pressure on risk assets.
Brazil's real BRL= eyed its best day in a year against the dollar, while stocks in the country .BVSP surged. Still, the day's gains were small in the face of an extended rout over the past month, which had seen risk assets plumb multi-year lows.
Sentiment was strengthened as the death toll from the virus appeared to be slowing across several European hot spots, sparking hopes that the pandemic could be contained with the right measures. MKTS/GLOB
"This has us looking at a fairly classic ‘risk on‘ FX market response this morning, although we think today's better feel is just a blip in the otherwise more challenging environment," TD Securities wrote in a note.
Disruptions to business activity from the virus are expected to push the global economy into a deep recession this year, with a string of dismal PMIs last week heralding as much.
Brazil's real jumped 2%, while the Bovespa stocks index added around 7%. Financial stocks led gains on the index despite the country's central bank cracking down on bank dividends and share buybacks to maintain liquidity amid the pandemic.
Chile's peso CLP= also rose, taking support from higher prices of copper, the country's top export. Copper prices rose as several Chilean miners flagged possible output cuts due to production being affected by the virus. MET/L
Chilean stocks .SPIPSA also added about 3.6%, reaching a three-week high.
Mexico's peso MXN= lagged most of its regional peers, as the country's plan to combat the economic shocks from the outbreak sparked criticisms that it would not suffice.
Fitch Ratings also downgraded Mexico's state-run oil and gas firm, Pemex, citing a downturn in the global oil industry due to the outbreak.
Falling demand coupled with a supply glut sent oil prices crashing in March, adding further pressure to oil-sensitive currencies such as Mexico's and Colombia's peso COP=
The Colombian currency rose about 0.9% for the day, while stocks in the country .COLCAP added 2.9%.
Key Latin American stock indexes and currencies at 1511 GMT
Daily % change
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile IPSA .SPIPSA
Colombia COLCAP .COLCAP
Daily % change
Brazil real BRBY
Mexico peso MXN=D2
Chile peso CLP=CL
Colombia peso COP=
Peru sol PEN=PE
Argentina peso (interbank) ARS=RASL
(Reporting by Ambar Warrick in Bengaluru)