April 27, 2020 / 2:32 PM / 4 months ago

EMERGING MARKETS-Brazil's real tumbles; Broader Latam slightly helped by stimulus cheer

    * Brazil's central bank intervenes in FX market
    * MSCI Latam stocks index rises 3%
    * Mexican, Colombian pesos lead gains in FX

    By Ambar Warrick
    April 27 (Reuters) - Brazil's real eyed a fresh record low
on Monday after plummeting last week, while Mexico's peso led
other Latin American currencies higher as continued global
stimulus measures sparked some appetite for riskier assets. 
    The real fell about 0.9%. Its sharp decline since the
coronavirus outbreak, which has seen it underperforming its
peers, has prompted sustained intervention by the Brazilian
central bank to stop further weakness.
    The resignation of Brazil's popular justice minister last
week dealt a severe blow to Brazilian President Jair Bolsonaro,
who had already faced backlash over his handling of the
coronavirus outbreak.
    Investors further cut their exposure to Brazil on the
likelihood Latin America's largest economy was headed for a
political crisis. 
    The Mexican peso and the Colombian peso edged
up for the day, taking some support from increased stimulus
measures in Japan to dampen the economic shock from the
coronavirus pandemic, which has battered the global economy.
    Still, both currencies were relatively close to lifetime
lows hit during the initial rout caused by the spread of the
virus, which has spurred sustained outflows from emerging
markets in favor of the U.S. dollar. 
    The pandemic is also expected to hit emerging markets
particularly hard, given that many economies in that space were
already in dire straits before the outbreak culled business
activity across the globe.
    "We see risks skewed towards a renewed increase in EM FX
volatility as the economic shock on EM economies intensifies and
risks of further waves of virus cases increases," wrote Mitul
Kotecha, senior emerging markets strategist at TD Securities.
    "Unlike developed economies, the capacity for EM governments
and central banks to deal with the economic and health shock is
    However, Latin American stocks have been slightly more
receptive to the slight improvement in risk appetite, with the
MSCI's index of regional stocks adding 3% for
the day.
    The index is nearly 10% above the lows hit in March, but is
a long way off levels seen prior to the outbreak.
    Brazilian stocks added 3.6%, recovering from deep
losses over last week, while Chilean stocks rose 1.2%.
    Among notable individual movers, shares of Brazilian
planemaker Embraer SA plunged 12% after it began
arbitration proceedings against former partner Boeing Co.

    Markets were now awaiting the outcomes of crucial central
bank meetings in the developed world to gauge further how the
world's largest economies outline measures to combat the
coronavirus pandemic.
    Key Latin American stock indexes and currencies at 1405 GMT
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets          895.38                 1.82
 MSCI LatAm                    1547.19                    3
 Brazil Bovespa               78067.88                 3.63
 Mexico IPC                   34538.55                -0.14
 Chile IPSA                    3723.91                  1.2
 Argentina MerVal                    -                    -
 Colombia COLCAP               1115.98                -0.57
       Currencies             Latest      Daily % change
 Brazil real                    5.6344                -0.91
 Mexico peso                   24.7950                 0.62
 Chile peso                      857.2                 0.19
 Colombia peso                 4025.87                 0.33
 Peru sol                       3.3897                 0.15
 Argentina peso                66.5200                -0.14

 (Reporting by Ambar Warrick in Bengaluru
Editing by Paul Simao)
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