March 10, 2020 / 1:59 PM / 19 days ago

EMERGING MARKETS-Most Latam currencies firm on oil rebound, stimulus hopes

    By Susan Mathew
    March 10 (Reuters) - Most Latin American currencies firmed
on Tuesday, recovering from steep falls last session as a
rebound in oil prices and hopes of stimulus buoyed sentiment.   
    Currencies of Brazil, Chile and Colombia
 came off all-time lows hit last session, but still
hovered near those levels. They rose between 0.8% and 1.2%. 
    Mexico's peso gave up gains made during Asian and
European trading hours of as much as 2.3%, to trade 0.5% lower
even after Mexico's currency commission increased the size of
its program of foreign exchange auctions to $30 billion from $20
billion.
    The Mexican and Colombian pesos had tumbled on Monday when
oil prices crashed after Saudi Arabia sparked a price war with
Russia, but a recovery in crude prices by 8% on stimulus hopes 
induced some calm.
    U.S. President Donald Trump on Monday promised "major" steps
to combat the virus outbreak and said he would discuss a payroll
tax cut with congressional Republicans. Markets now await
Trump's news conference on Tuesday.            
    "While fiscal stimulus will help deal with the fallout of
economic dent from the virus, we are circumspect that this will
have a durable impact ... This circumstance will likely only
follow a breakthrough on the development of an antiviral vaccine
or a leveling off in confirmed cases," said Mazzen Issa, a
senior FX strategist at TD Securities.  
    Panic remains in markets about a likely recession as the
fast-spreading coronavirus has infected more than 100,000
people. 
    "The viral outbreak has not only hit supply chains, but is
turning into a demand shock. The Trump administration intends to
announce a fiscal package, but with transparency in doubt over
the handling of the outbreak, remaining defensive in risk is
appropriate," TD Securities' Issa said. 
    Brazil's Treasury has canceled the auction of fixed rate
bonds scheduled for this week "due to more restrictive financial
market conditions," it said in a statement on its website late
on Monday.
    Sao Paulo's Bovespa stock index jumped 4.7% after
posting its worst day since 1998. The rebound in oil and higher
iron ore prices lifted Petrobras and Vale
 shares, respectively. 
    Adding to the optimism, data on Tuesday showed Brazilian
industry got the year off to a solid start, with output rising
in January for the first month in three and at its fastest pace
since August.
    Chile stocks were on course to make up almost of
Monday's losses, up 3%. 
           
    Key Latin American stock indexes and currencies at 1327 GMT:
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       961.88     1.47
                                     
 MSCI LatAm                 2071.23     3.87
                                     
 Brazil Bovespa            90127.88     4.72
                                     
 Mexico IPC                       -        -
                                     
 Chile IPSA                 4151.10     2.86
                                     
 Argentina MerVal                 -        -
                                     
 Colombia COLCAP                  -        -
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.6742     1.09
                                     
 Mexico peso                20.9600    -0.84
                                     
 Chile peso                   831.5     1.20
                                     
 Colombia peso              3773.71     0.84
                                     
 Peru sol                    3.4877     0.49
                                     
 Argentina peso                   -        -
 (interbank)                         
                                     
 
 (Reporting by Susan Mathew in Bengaluru;)
  
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