March 11, 2020 / 2:01 PM / a month ago

EMERGING MARKETS-Latam FX weaken, stimulus awaited

    By Susan Mathew
    March 11 (Reuters) - Latin American currencies weakened on
Wednesday as lack of details from Washington regarding promised
stimulus had investors casting a skeptical eye on the
announcement. 
    Most regional currencies lost between 0.1% and 1.4% against
the dollar - also in the red as uncertainty stemming from the
coronavirus outbreak and an oil price war between Russia and
Saudi Arabia sent investors scurrying to the safety of the yen
, Swiss franc and gold.
    After a bruising sell-off on Monday, emerging markets stocks
and currencies had risen in last session after U.S. President
Donald Trump said "major steps" would be taken to salvage
markets. But, the lack of major announcements since then has
left some investors unimpressed.
    Hopes of global stimulus, however, were kept alive as the
Bank of England cut rates by 50 basis points and introduced a
slew of other measures before unveiling an $30 billion economic
stimulus plan designed to stave off a recession triggered by the
coronavirus outbreak.
    Investors will now look to the European Central Bank's
decision on Thursday. 
    Mexico's peso led losses in the region, down 1% at
21.06 to the dollar, as oil resumed its decline.
    For oil exporter Mexico, "the impact of the oil price
collapse will potentially be severe, as Pemex and sovereign
ratings downgrade risk rises once again, with little fiscal room
to maneuver for the government given challenging growth
dynamics," wrote Sacha Tihanyi, deputy head of emerging markets
strategy at TD Securities. 
    Pemex, as the state oil firm Petroleos Mexicanos is commonly
known, is Latam's most indebted firm and reported one of its
worst-ever losses last year. Fitch downgraded it last year and
it faces threat of downgrade by S&P and Moody's.
    Brazil's real declined 0.4%. Data on Wednesday showed
consumer price inflation in the country, as measured by the IPCA
index, rose 0.25% in February, a 10 percentage points more than
expected. 
    Latam stocks tracked Wall Street lower, with Brazil's
bovespa giving up 2.5%, while Chile stocks
lost 0.8% to hover near 3-1/2 year lows.
    
    Key Latin American stock indexes and currencies at 1349 GMT:
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       953.22    -1.17
                                     
 MSCI LatAm                 2069.18    -2.04
                                     
 Brazil Bovespa            89954.05    -2.45
                                     
 Mexico IPC                       -        -
                                     
 Chile IPSA                 4037.02    -0.82
                                     
 Argentina MerVal                 -        -
                                     
 Colombia COLCAP            1350.58    -0.71
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.6629    -0.40
                                     
 Mexico peso                21.1260    -1.34
                                     
 Chile peso                   833.7     0.42
                                     
 Colombia peso                 3809    -1.21
                                     
 Peru sol                    3.5018    -0.03
                                     
 Argentina peso             62.6600    -0.11
 (interbank)                         
                                     
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Marguerita Choy)
  
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