February 12, 2020 / 8:17 PM / 2 months ago

EMERGING MARKETS-Brazil's real hits fresh low, lags steady Latam markets

    * Real under pressure from weak retail sales data
    * Bovepsa lifted by batch of earnings updates 
    * IMF set to begin debt talks with Argentina 

 (Updates prices)
    By Sruthi Shankar
    Feb 12 (Reuters) - The Brazilian real slid to a fresh record
low on Wednesday after data showed the country's retail sales
dropped unexpectedly in December, while broader Latin American
markets gained on hopes the coronavirus outbreak in China has
    The real fell as much as 0.5% to 4.3526, making it
one of the worst-performing currencies in the world against the
dollar this year, down almost 8%. The Brazilian currency has
been pressured by slow overseas demand for Brazilian assets with
interest rates at a record low.
    Data showed Brazilian retail sales fell 0.1% in December,
the first decline in eight months and another sign that consumer
spending in Latin America's No. 1 economy will not power growth.

    "We think there is more weakness to come especially
considering that the BCB has so far made no hints that it stands
ready to intervene," analysts at Oxford Economics wrote in a
client note, referring to Brazil's central bank. They added that
there is still room to go before the real crosses into oversold
    Other currencies in the region recovered as China reported
its lowest number of new coronavirus cases since late January,
supporting its senior medical adviser's prediction that the
outbreak might end by April.
    The Colombian peso rose 1%, aided by a jump in crude
prices. The Mexican peso was up 0.2% ahead of a central
bank meeting on Thursday when it is expected to cut its key
interest rate by 25 basis points to 7%.
    In equity markets, Sao Paulo-listed shares jumped
1.5%, with education company Cogna Educação SA
leading gains after it raised 2.5 billion reais ($577 million)
in a share offering.
    Wireless carrier TIM Participações SA rose 4%
after it posted better-than-expected quarterly income, helped by
higher customer spending.
    The International Monetary Fund was set to start talks with
Argentina about economic policy, with the local bond market
muddled after a failed debt auction and unilateral reprofiling
of principal payments this week.
    On Tuesday, Argentina decided to postpone a $1.47 billion
principal payment on its AF20 bond until Sept. 30, after two
attempts to roll over the bond attracted low investor
    The government says it needs to rejig $100 billion in debt,
including $44 billion in loans to the fund, Argentina's biggest
single creditor.
    Key Latin American stock indexes and currencies at 1946 GMT:
           Stock indexes                    Latest    Daily %
 MSCI Emerging Markets                       1110.01      0.96
 MSCI LatAm                                  2818.15      1.04
 Brazil Bovespa                            117152.35      1.54
 Mexico IPC                                 45453.24      0.95
 Chile IPSA                                  4667.90      0.16
 Argentina MerVal                           40067.84     0.611
 Colombia COLCAP                             1659.88      0.89
              Currencies                    Latest    Daily %
 Brazil real                                  4.3508     -0.42
 Mexico peso                                 18.6200      0.18
 Chile peso                                      790      0.19
 Colombia peso                                  3386      0.96
 Peru sol                                      3.378      0.27
 Argentina peso (interbank)                  61.2275     -0.18
 (Reporting by Sruthi Shankar in Bengaluru; Editing by David
Gregorio and Paul Simao)
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