May 13, 2020 / 2:42 PM / 16 days ago

EMERGING MARKETS-Mexican peso leads gains; political uncertainty pressure Brazil's real

    By Susan Mathew
    May 13 (Reuters) - Mexico's peso rallied on Wednesday ahead
of details regarding the country's plan to ease out of a
coronavirus-led lockdown, while intensifying political
uncertainty in Brazil weighed on its currency. 
    Most Latam bourses followed Wall Street into
the red after U.S. Federal Reserve Chairman Jerome Powell warned
of a prolonged recession due to the pandemic. The dollar was
flat, cutting losses after Powell dispelled speculation about
negative interest rates.
    "It's the words that he used. 'Significant downside risk' is
a very negative, negative choice of words," said Kenny Polcari,
chief market strategist at Slatestone Wealth LLC. 
    Rising fears of a second wave of COVID-19 and nagging
tensions between Washington and Beijing also pressured markets.

    Brazil's real underperformed as new evidence in a
probe revealed that President Jair Bolsonaro planned to change
the federal police chief in Rio de Janeiro to protect his family
from investigation.
    Brazil's prosecutor general is to decide whether to charge
the president with obstruction of justice and abuse of power. If
the Supreme Court and two-thirds of the lower house of Congress
see merit to any charges, Bolsonaro would be suspended and would
stand trial. 
    Bolsonaro's popularity has plummeted on his handling of the
COVID-19 outbreak. Bolsonaro fought states over his wish to
reopen gyms and beauty parlors as his country has become a
global hotspot for the pandemic.
    Sao Paulo-listed stocks rose on a materials boost.
Iron ore miner Vale rose 1.5% even after the
Norwegian sovereign wealth fund - the world's largest -
announced it would exclude Vale from its portfolio due to
environmental and human rights issues.
    In Mexico, President Andres Manuel Lopez Obrador was to give
more details about how suspended business operations and other
activities would reopen in coming weeks. On Tuesday, the
government okayed a restart to production in the automotive
industry.  
    The peso firmed 1.3%, while stocks fell 0.9%. 
    Colombia's currency fell 0.6% and the stock benchmark
 extended losses for a fourth day as the country's
coronavirus caseload grew. 
    
    Key Latin American stock indexes and currencies at 1427 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     912.82     0.39
                                   
 MSCI LatAm               1551.80    -1.61
                                   
 Brazil Bovespa          78338.21      0.6
                                   
 Mexico IPC              37087.42       -1
                                   
 Chile IPSA               3706.42    -0.76
                                   
 Argentina MerVal        38476.52   -1.679
                                   
 Colombia COLCAP          1068.83    -1.88
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.9182    -0.91
                                   
 Mexico peso              24.1310     0.93
                                   
 Chile peso                 820.7     0.22
                                   
 Colombia peso            3897.84    -0.57
                                   
 Peru sol                  3.4297     0.09
                                   
 Argentina peso           67.5400    -0.12
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru; Editing by David
Gregorio)
  
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