EMERGING MARKETS-Latam FX sapped by firm dollar on virus woes, Mexican peso hits one-month low
By Medha Singh
Sept 23 (Reuters) - Latin American currencies resumed their slide on Wednesday, with the Mexican peso and Brazilian real hitting one-month lows against a perky dollar amid renewed fears over the fragile global economy's fate in the face of rising coronavirus cases.
Both the Mexican peso MXN= and Brazilian real BRBY, BRY= shed over 1%, down for the fourth straight session.
MSCI's index for Latin American currencies .MILA00000CUS dropped about 2% after taking a breather on Tuesday from a dire start to the week on concerns over another round of pandemic-related business shutdowns in some European countries.
An emergency approval of one to three COVID-19 vaccines is likely in the coming months, UBS Asset Management predicted on Wednesday, adding that the approval would catalyze a U.S. dollar weakness and help higher-beta emerging market currencies meaningfully outperform.
The asset management arm of the Swiss bank said it prefers equity markets outside of the U.S. and that Latin America currencies stood out as "particularly attractive".
Focus this week is on Mexico's central bank policy statement on Thursday where the pace of interest rate cuts is expected to slow.
Meanwhile, markets are divided over whether the Colombian central bank will continue to trim its benchmark interest rate or halt cuts to stem capital outflows, a Reuters poll showed.
Interest rates are likely to remain at low levels in Brazil, Chile, Colombia, Mexico and Peru, and not return to the previous cycle's high point in the next two years or so, regardless of an economic recovery's trajectory, Moody's Investors Service said.
The Argentine peso ARS=RASL logged another all-time low against the dollar amid concerns over economic recovery following the central bank's steps to tighten currency controls and restrict already limited access to dollars last week.
Argentine Economy Minister Martin Guzman in comments made before Congress on Tuesday stood by the country's newly adopted currency controls.
Stocks in Latin America were mixed with Mexican shares edging 0.2% higher, Brazil's Bovespa down 0.3% while those in Chile .SPIPSA shedding 1.3%.
Among individual stocks, Brazilian rent-a-car company Localiza RENT3.SA stood out with its 12% jump as it agreed to take over rival Unidas LCAM3.SA for roughly 12 billion reais ($2.18 billion), creating a behemoth that could account for more than 10% of all cars sold in Brazil.
Unidas shares soared over 17%.
Key Latin American stock indexes and currencies at 1430 GMT:
daily % change
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile IPSA .SPIPSA
Argentina MerVal .MERV
Colombia IGBC .COLCAP
daily % change
Brazil real BRL=
Mexico peso MXN=
Chile peso CLP=CL
Colombia peso COP=
Peru sol PEN=PE
Argentina peso (interbank) ARS=RASL
(Reporting by Medha Singh in Bengaluru; Editing by Sandra Maler)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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