October 21, 2019 / 2:37 PM / a month ago

EMERGING MARKETS-Violent protests in Chile hammer its markets, other Latam FX weaken

    By Susan Mathew
    Oct 21 (Reuters) - Latin American currencies slipped against
a steady dollar on Monday, while Chile markets tumbled after a
state of emergency was declared in the capital city of Santiago
following violent protests over the weekend. 
    Chile's peso slumped 2% and was on course to log its
biggest one-day drop in more than 6 years, while stocks
sank almost 3% in what could be their worst day in two years. 
    The military was put in charge of security in Santiago after
youth protests against fare hikes on public transport
implemented earlier this month turned to vandalism and arson.
President Sebastian Pinera later extended emergency rule to
cities to the north and south of the capital.
    "The events were entirely unexpected and should lead to a
weaker CLP in the near term," analysts at Citigroup wrote in a
note. "We don't expect the weakness to sustain unless the
situation deteriorates much further."
    While Citi Economics differs from market expectations of a
cut in interest rates by the central bank later this week, the
risk of one has certainly increased after the unrest, they said.
    Workers at BHP's Escondida copper mine - the world's largest
- said they would hold a day-long strike on Tuesday in a show of
solidarity. Copper prices shot up on the London Metals
exchange.
    Brazil's real slipped half a percent with the final
Senate vote on the government's pension reform bill expected to
take place on Tuesday. 
    The reform is seen as crucial to reducing Brazil's primary
deficit and spurring a recovery in the sluggish economy. If the
bill wins Tuesday's vote, that will clear the way to passing the
bill into law.
    The real has seen volatility for months as the bill made its
way through houses of parliament after President Jair
Bolsonaro's administration introduced it upon taking office in
January. 
    Lower oil prices pressured crude exporter Colombia's
currency, while Mexico's peso fell 0.1% but
hovered near 2-1/2 month highs as broader market sentiment was
buoyed by trade optimism.
    Over the weekend, Chinese Vice Premier Liu He said Beijing
will work with Washington to address each other's concerns on
trade issues.
    Most stocks in the region inched higher, tracking a rise on
Wall Street.
    Yduqs was the biggest gainer on Brazil's
benchmark index after the education company said it bought
Adtalem Global Education Inc's local assets for 1.92
billion reais ($467 million).    
    
    Key Latin American stock indexes and currencies at 1412 GMT:
   Stock indexes            Latest    Daily %
                                      change
 MSCI Emerging Markets       1027.98     0.39
                                      
 MSCI LatAm                  2701.13    -0.37
                                      
 Brazil Bovespa            104790.56     0.06
                                      
 Mexico IPC                 43368.95     0.44
                                      
 Chile IPSA                  5043.10    -2.88
                                      
 Argentina MerVal                  -        -
                                      
 Colombia IGBC              12861.17     0.22
                                      
                                             
       Currencies           Latest    Daily %
                                      change
 Brazil real                  4.1332    -0.35
                                      
 Mexico peso                 19.1307    -0.16
                                      
 Chile peso                    725.3    -2.25
                                      
 Colombia peso               3437.23    -0.37
 Peru sol                     3.3418    -0.17
                                      
 Argentina peso              58.5500    -0.34
 (interbank)                          
                                      
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Chizu Nomiyama)
  
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