March 13, 2020 / 2:28 PM / a month ago

EMERGING MARKETS-Latam currencies rebound off record lows on coronavirus stimulus hopes

    By Susan Mathew
    March 13 (Reuters) - Latin American currencies rose on
Friday, moving up from all-time lows as hopes of more central
bank stimulus and government spending lifted sentiment after
worries over the coronavirus outbreak drove a bruising sell-off
this week.
    As an increasing number of central banks across the globe
made generous liquidity injections into markets and governments
ramped up fiscal measures and virus containment efforts, hopes
of more policy help supported risk sentiment. 
    A recovery in oil prices saw Colombia's peso surge
3.4% in what could be its best day in four years, while Mexico's
peso rallied 2%. 
    Brazil's real jumped 3% and was on course for its
biggest intraday gain since June 2018. Brazil will unveil a
package of measures in the next few days to combat coronavirus
and the economic damage it is causing, Economy Minister Paulo
Guedes said on Friday, adding that all steps that don't affect
the country's fiscal position will be considered.
     As copper prices rose, Chile's peso gained 1.5%
against the dollar.
    The dollar regained its safe-haven appeal as investors
scrambled to the most liquid currency as a rising number of new
coronavirus cases outside China raised uncertainty about the
impact on global growth. 
    Markets sold off this week on fears that measures to contain
the coronavirus will cause a significant economic slowdown in
United States and Europe. An oil shock added to the worries.   
    On the week, Colombia's currency in on course for its worst
performance since 2008, and the Mexican peso since late 2016.
    "The brutal sell-off caused severe damage to market
confidence, and any rallies may not prove sustainable and could
be followed by another leg lower," warned Piotr Matys, senior EM
forex strategist at Rabobank. 
    All eyes are on the U.S. Federal Reserve's policy meeting
next week. Investors have already priced in a 75-basis-point cut
in the U.S. central bank's key overnight lending rate. 
    With all of its companies gaining ground, Sao Paulo's
Bovespa stock index surged as much as 15.4% before
paring the gains to trade 7% higher. The index lost 14.8% on
Thursday and is still on track to end the week around 20% lower
- its sharpest fall since the 2008 global financial crisis. 
    Mexico's IPC index jumped 3.2%, but weekly losses of
around 8% are also its worst since 2008. 
    
    Key Latin American stock indexes and currencies at 1406 GMT:
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       890.76     0.86
                                     
 MSCI LatAm                 1823.19     8.31
                                     
 Brazil Bovespa            77672.98     7.01
                                     
 Mexico IPC                37798.07     3.17
                                     
 Chile IPSA                 3781.50     1.45
                                     
 Argentina MerVal                 -        -
                                     
 Colombia COLCAP                  -        -
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.7051     1.68
                                     
 Mexico peso                21.5630     1.57
                                     
 Chile peso                   835.8     2.15
                                     
 Colombia peso              3912.05     2.91
                                     
 Peru sol                    3.5198     0.20
                                     
 Argentina peso             62.8900    -0.11
 (interbank)                         
                                     
 
 (Reporting by Susan Mathew in Bengaluru
Editing by Paul Simao)
  
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