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EMERGING MARKETS-Mexican peso leads Latam FX lower against strengthening dollar

    * Mexico confirms new coronavirus strain first seen in UK
    * Brazilian real hits lowest level in two months
    * Oil-exporter Colombia falls after crude prices slide

    By Shreyashi Sanyal
    Jan 11 (Reuters) - Mexico's peso slipped along with most
other currencies in Latin America on Monday as the country
confirmed it had detected the new variant of the coronavirus
first seen in Britain, while the dollar touched its highest in
over two weeks.  
    The peso weakened 1.2% to hit a three-week low
against the dollar after the confirmation of the especially
contagious variant of the virus for the first time in Mexico,
home to the pandemic's forth-highest death toll globally.

    Most currencies in the region weakened, with MSCI's index
for Latin American currencies down 1.4% as
rising Treasury yields boosted the dollar. 
    "Shorting the dollar was the most recommended trade in
currency markets heading into 2021. However, rising yields could
now lead to a rethinking of this strategy," said Hussein Sayed,
chief market strategist at FXTM. 
    The Brazilian real slid 1.4%, touching its
lowest since November. The focus now is on Brazil's mass
inoculation campaign, with investors also dissatisfied by the
pace of the government's reform agenda.    
    "The risks to economic recovery reside in a
stronger-than-expected impact of the unwinding of fiscal
stimulus and a  possible tightening of social mobility
restrictions caused, for example, by a delay in the vaccination
of the population," said Solange Srour, chief economist at
Credit Suisse in Brazil.
    The outlook for Brazilian interest rates over the next two
years rose to their highest in several months, a central bank
survey of economists showed, even as exchange rate and inflation
expectations held steady.
    Oil-exporter Colombia's currency fell 1.3% after
crude prices dropped on renewed concerns about global fuel
demand amid tough coronavirus lockdowns around the world.
    Chile's peso weakened 1% against the dollar as prices
of its top export, copper, fell as surging coronavirus cases in
top consumer China reinforced demand worries. 
    MSCI's index of emerging market stocks hit another
record high on Monday on a combination of post COVID-19 economic
recovery hopes and massive global stimulus.
    Brazil's Bovespa index fell 1%, with
state-controlled lender Banco do Brasil SA down 2%
after announcing a restructuring aimed at saving up to 2.7
billion reais ($493 million) by 2025.
    Key Latin American stock indexes and currencies at 1415 GMT:
    
         Stock indexes                  Latest   Daily %
                                                 change
 MSCI Emerging Markets                  1352.75    -0.06
 MSCI LatAm                             2481.28    -2.24
 Brazil Bovespa                       123740.95    -1.07
 Mexico IPC                                0.00        0
 Chile IPSA                             4502.58    -1.26
 Argentina MerVal                          0.00        0
 Colombia COLCAP                           0.00        0
                                                        
             Currencies                 Latest   Daily %
                                                 change
 Brazil real                             5.4912    -1.38
 Mexico peso                            20.2008    -0.96
 Chile peso                               718.5    -1.34
 Colombia peso                          3514.47    -1.37
 Peru sol                                3.6148    -0.25
 Argentina peso (interbank)             85.3800    -0.29
                                                 
 Argentina peso (parallel)                  157     3.18
                                                 
 

 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Kirsten
Donovan)
  
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