March 18, 2020 / 7:58 PM / 10 days ago

EMERGING MARKETS-Latam currencies plumb record lows, stocks in 15-year trough

    * Currencies of Mexico, Brazil, Chile touch new lows
    * Brazil cenbank rate decision awaited; 25 bps cut expected
    * Credit Suisse sees Mexico, Chile most impacted by pandemic
    * Chilean stocks at near 11-year low

 (Adds details, updates prices)
    By Ambar Warrick and Susan Mathew
    March 18 (Reuters) - Brazilian, Mexican and Chilean
currencies sank to record-low valuations on Wednesday, while
Latin American stocks tanked as continued concerns over the
coronavirus spurred a mad rush out of risk assets.  
    Brazil's real weakened more than 4% to a record low
of 5.2540 to the dollar, as the government sought to declare a
state of emergency. 
    Two members of Brazil's cabinet tested positive for the
virus, which is also taking a severe toll on the country's
retail, transport and key automobile manufacturing industry due
to measures taken to curb its spread.
    Brazilian shares sank 14% to near 2-1/2 year lows,
while an index of Latin American stocks touched
a 15-year low.
    Investors are now watching for a likely rate cut from
Brazil's central bank later in the day, with borrowing rates in
the country seen slipping further into record-low territory.

    "It remains to be seen to what extent it signals its
willingness to take further steps," said You-Na Park-Heger, an
analyst at Commerzbank. "In the end, it might become clear today
that monetary policy scope in Brazil is limited." 
    Chile's peso slid 2.3%, while Mexico's peso
fell 4.2%. Both currencies touched their weakest levels ever to
the dollar.
    The greenback has benefited greatly from the pandemic, as
investors flock in droves to the safety of the world's reserve
currency. The dollar currently stands at a near three-year high
against a basket of currencies.
   "Everything that could be sold was sold against the dollar.
We’d be foolish to argue that this can turn around anytime soon
– perhaps not until new Covid-19 cases start to slow," ING wrote
in a note. 
    Mexican stocks dropped 2.4%, while Chilean stocks
 tumbled more than 12% to their lowest level since
2009.
    As oil prices tanked, crude exporter Colombia's peso
gave up nearly 4% to hover near all-time lows.
    Credit Suisse analysts said they see Mexico and Chile being
hurt the most from the pandemic due to their dependence on the
United States and China, respectively.
    In Argentina, the government on Tuesday rolled out tax
breaks and higher state spending on infrastructure to protect
the country's already vulnerable economy from the pandemic's
impact.     
    
    Key Latin American stock indexes and currencies at 1944 GMT:
    
    Stock indexes             Latest    Daily % change
 MSCI Emerging Markets          781.58           -5.46
                                        
 MSCI LatAm                    1430.95          -13.29
                                        
 Brazil Bovespa               64805.39          -13.15
                                        
 Mexico IPC                   35993.75           -2.36
                                        
 Chile IPSA                    2876.03          -12.09
                                        
 Argentina MerVal             22220.77         -13.951
                                        
 Colombia COLCAP                883.02          -11.74
                                        
                                                      
       Currencies             Latest    Daily % change
 Brazil real                    5.2277           -4.37
                                        
 Mexico peso                   23.9170           -4.10
                                        
 Chile peso                      867.8           -2.26
                                        
 Colombia peso                 4156.25           -3.83
 Peru sol                       3.5718           -0.81
                                        
 Argentina peso                63.3200           -0.22
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru; editing by Nick Macfie
and Marguerita Choy)
  
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