June 15, 2020 / 2:20 PM / 25 days ago

EMERGING MARKETS-Brazil's real, Mexican peso lead Latam FX lower; stocks fall

    * Brazil's real set for steepest one-day drop in 1-1/2
    * Mexican peso pressured by weak oil
    * Brazilian central bank rate cut expected on Wednesday

    By Ambar Warrick
    June 15 (Reuters) - Latin American markets extended losses
into a fourth straight session on Monday, tracking a broader
retraction in risk appetite as investors fretted over a
resurgence of COVID-19 cases.
    Brazil's real and the Mexican peso were the
worst performing currencies for the day, losing about 2.7% and
1.3%, respectively.
    A new COVID-19 outbreak in Beijing, coupled with rising
cases in the United States, increased concerns over the smooth
reopening of economies from virus-related lockdowns, spurring
safe-haven demand for the dollar.    
    "Windows of optimism as lockdowns are eased have been
temporarily snapped shut as second wave fears emerge. Our bias
would be that aggressive central bank liquidity provision means
that risk assets are a buy on dips and the dollar a sell on
rallies," ING analysts wrote in a note.
    Regional stocks and currencies had recently come off
three-month highs, logging large weekly losses as sobering
comments from the U.S. Federal Reserve saw a broad reassessment
of an expected economic recovery that had been priced into
    Brazil's real was set for its steepest one-day drop
since late-April, with markets also looking to the Brazilian
central bank to cut interest rates further into record-low
territory on Wednesday.
    The cut is expected to be the last in an easing cycle by the
bank to support Latin America's largest economy through the
coronavirus pandemic.
    Brazilian stocks fell nearly 2%, touching a near
two-week low.
    Mexico's peso was weighed down by weaker oil prices, as the
prospect of fresh virus-related lockdowns pointed toward
dampened demand. Mexican stocks fell more than 1%.
    The country will have to pay more for less coverage under
its giant oil revenue insurance policy for 2021 but will likely
go ahead anyway to avoid further damaging its financial standing
with international investors, sources said.
    Chile's peso fell nearly 1% as the prices of copper,
the country's top export, retreated on fears of lower demand.

    Argentine and Colombian markets were closed for a holiday.
    Key Latin American stock indexes and currencies: 
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets          965.01               -2.23
 MSCI LatAm                    1898.22               -3.12
 Brazil Bovespa               91002.71               -1.93
 Mexico IPC                   37212.98               -1.24
 Chile IPSA                    3910.75               -1.79
       Currencies             Latest      Daily % change
 Brazil real                    5.1846               -2.72
 Mexico peso                   22.5320               -1.39
 Chile peso                      799.1               -0.70
 Peru sol                       3.4817               -0.49

 (Reporting by Ambar Warrick in Bengaluru)
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