May 17, 2019 / 2:38 PM / 7 days ago

EMERGING MARKETS-Latam currencies shed 2019 gains as Sino-U.S. rift deepens

    By Agamoni Ghosh
    May 17 (Reuters) - Latin American currencies fell to near
five-month lows on Friday, wiping out their 2019 gains as the
protracted trade war between the United States and China took
its toll on riskier assets and a biting recession and high
inflation hit Argentina's peso. 
    MSCI's index of Latin American currencies
was on track to record their fifth week of losses as trade
headlines continued to hammer emerging market currencies.
    The week brought retaliation from both the United States and
China, including Beijing imposing higher tariffs on most U.S.
imports and President Donald Trump blocking China's Huawei
Technologies from buying vital American technology.
    The Communist Party's People's Daily used a front page
commentary on Friday to evoke the patriotic spirit of past wars,
saying the trade spat would never bring China down. 
    "We continue to see the near-term risks for EM tilted to the
downside, and the risk of additional tariffs being implemented
is rising," Morgan Stanley analysts said in a note. 
    Brazil's real led losses among currencies in the
region on dour economic forecasts and deepening uncertainty over
the government's ability to get its flagship pension reform bill
through. 
    Central bank President Roberto Campos Neto acknowledged on
Thursday that the economy may have contracted slightly in the
first quarter and that controlling inflation hinged on the
approval and implementation of fiscal reforms. 
    Sao Paulo-traded stocks, which fell almost 2% in the
previous session, managed to claw back into positive territory,
helped by financial stocks and Vale.  
    Mexican stocks were marginally higher, while the peso
 shed 0.3% a day after the central bank left borrowing
costs steady, citing possible pressure on the currency's
exchange rate as a risk for inflation to quicken. 
    Chile's peso fell to its lowest levels this year,
tracking a dip in the price of copper, the country's top
export.
    Argentina's peso slipped 0.4% in early trade. The
peso has slid almost 17% this year, hammered by a biting
recession and high inflation, cranking up the challenge facing
President Mauricio Macri's government ahead of elections in
October.  

  Key Latin American stock indexes and currencies at 1415 GMT   
    
 Stock indexes                        daily %
                             Latest    change
 MSCI Emerging Markets        996.72    -1.43
                                      
 MSCI LatAm                  2528.15    -0.97
                                      
 Brazil Bovespa             90372.32     0.39
                                      
 Mexico IPC                 43493.35     0.12
                                      
 Chile IPSA                  4956.52    -0.43
                                      
 Argentina MerVal                  -        -
                                      
 Colombia IGBC                     -        -
                                      
                                             
 Currencies                           daily %
                                       change
                              Latest  
 Brazil real                  4.0823    -1.13
                                      
 Mexico peso                 19.1641    -0.23
                                      
 Chile peso                    697.2    -0.50
                                      
 Colombia peso               3308.86    -0.34
 Peru sol                      3.324    -0.21
                                      
 Argentina peso              45.0400    -0.53
 (interbank)                          
                                      
 
 (Reporting by Agamoni Ghosh; Editing by Dan Grebler)
  
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