US Markets

EMERGING MARKETS-Latam FX cheered by slowing coronavirus toll; Brazil's real leads

Credit: REUTERS/PILAR OLIVARES

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.

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

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

852.66

2.52

MSCI LatAm .MILA00000PUS

1583.14

6.75

Brazil Bovespa .BVSP

74635.81

7.33

Mexico IPC .MXX

34469.86

4.22

Chile IPSA .SPIPSA

3813.17

3.78

Colombia COLCAP .COLCAP

1160.13

2.89

Currencies

Latest

Daily % change

Brazil real BRBY

5.2456

1.50

Mexico peso MXN=D2

24.8270

0.54

Chile peso CLP=CL

853.8

1.28

Colombia peso COP=

3985.07

0.73

Peru sol PEN=PE

3.4198

1.11

Argentina peso (interbank) ARS=RASL

64.9000

0.02

(Reporting by Ambar Warrick in Bengaluru)

((Ambar.Warrick@thomsonreuters.com; +91-80-6182-2837; Reuters Messaging: ambar.warrick.thomsonreuters.com@reuters.net; Twitter: @AmbarWarrick))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

World Markets

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More