for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

EMERGING MARKETS-Latam currencies weaken on spillover from tumbling Turkish lira

    * Real snaps 3-day winning run
    * Peso headed for third day of falls
    * Brazil interest rate outlook shoots up 

 (Adds comments, updates prices throughout)
    By Sruthi Shankar and Shreyashi Sanyal
    March 22 (Reuters) - Mexico's peso fell and Brazil's real
broke a three-day winning run on Monday, showing the impact of a
plunge in the Turkish lira after the country's central bank
chief was ousted.
    Most emerging market currencies weakened on the news as
investors sought the safety of the U.S. dollar, although losses
outside of Turkish markets were contained.
    The Mexican peso fell 0.2% to head for its third day
of declines, while the real weakened by 0.3% to trade
near 5.50 per dollar.
    The Turkish lira briefly fell 15% to near record lows
after the weekend firing of Naci Agbal, which prompted fears of
a reversal of the tight monetary policy that has helped the
Turkish currency to outperform its rivals this year.

    "The next lira crisis is upon us," said Tatha Ghose, FX and
emerging markets analyst at Commerzbank.
    "The trigger... is the same as which started off the 2018
lira crisis: the president forcefully re-asserts his
unconventional monetary policy philosophy, making it clear that
an unknown policy experiment will now be conducted."
    The lira cut some losses to trade down 7.3%, while other
emerging market peers such as the South African rand and
eastern European currencies weakened slightly.
    "Even though EM is weaker this morning, we don't expect long
lasting contagion into Latam," Citi analysts wrote in a note.
    Brazil and Russia last week joined Turkey in raising
interest rates as they sought to tamp down inflation, with 
expectations of higher borrowing costs in the developed world
also hurting EM currencies.
    A central bank survey of economists showed on Monday
Brazil's interest rate outlook for this year and next shot up by
half a percentage point after last week's historic rate hike.

    The real hit its strongest level against the dollar in three
weeks on Friday after worries about the government's handling of
the coronavirus pandemic and higher inflation made it among the
worst-performing emerging market currencies this year.
    Most stock markets in Latin America were also hit, with
Brazil's Bovespa falling 0.8%. 
    Planemaker Embraer, down 7%, was the biggest
decliner on the benchmark index, while airline stocks Azul
 and Gol fell 5.3% and 2.8% respectively,
reflecting weakness in the travel sector globally on worries
about rising COVID-19 cases.
    Mexican stocks rose half a percent, tracking a
positive session on Wall Street.
    
    Key Latin American stock indexes and currencies at 1847 GMT:
 
         Stock indexes                  Latest    Daily %
                                                   change
 MSCI Emerging Markets                   1338.36      0.11
 MSCI LatAm                              2326.69     -0.87
 Brazil Bovespa                        115223.28     -0.86
 Mexico IPC                             47148.45      0.26
 Chile IPSA                              4818.92     -0.74
 Argentina MerVal                       48955.36    -0.042
 Colombia COLCAP                         1324.54     -0.08
                                                          
            Currencies                  Latest    Daily %
                                                   change
 Brazil real                              5.4970     -0.25
 Mexico peso                             20.5510     -0.28
 Chile peso                                  717     -0.50
 Colombia peso                            3557.4     -0.01
 Peru sol                                  3.712      0.10
 Argentina peso (interbank)              91.5600     -0.22
                                                  
 Argentina peso (parallel)                   140      2.86
                                                  
 

 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Jane Merriman and Jan Harvey)
  
for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up