March 5, 2020 / 2:25 PM / a month ago

EMERGING MARKETS-Latam FX weakens as surging coronavirus cases sap risk appetite

    By Susan Mathew
    March 5 (Reuters) - Latin American stocks and currencies
weakened on Thursday, with Brazil's real slipping to yet another
record low, as the rapid spread of the coronavirus sapped risk
appetite and investors worried about the scale of the economic
fallout.  
    Brazil's real continued its slide, down 0.6% to a new
low of 4.6114 to the dollar, while Mexico's peso lost
more than 1% in what could be its third straight session of
losses.
    Colombia's currency slid 1.5%, tracking losses in oil
prices, while Chile's peso touched a three-month low
despite a rise in its main export good, copper.  
    The weakness in regional currencies was in line with broader
emerging market peers and came even as the dollar languishes at
two-month lows.
    "The uncertainty surrounding coronavius is high, and we'll
probably see rising numbers (of infected cases) in many
countries and this weighs on risk sentiment," said Elisabeth
Andreae, an emerging market and foreign exchange analyst at
Commerzbank
    After the U.S. Federal Reserve delivered a 50-basis-point
emergency cut on Tuesday, expectations have risen that other
central banks might follow suit as the virus spreads
aggressively across the globe, forcing whole cities to shut down
and bringing economic activity in those areas to a standstill.

    The number of infected cases globally is fast approaching
100,000, and the death toll has climbed to over 3,000. 
    The outbreak has crushed hopes for stronger growth this year
and will hold 2020 global output gains to their slowest pace
since the 2008-2009 financial crisis, International Monetary
Fund Managing Director Kristalina Georgieva said on Wednesday.

    In Brazil, the deteriorating economic outlook for 2020,
exacerbated in recent days by coronavirus fears, has raised the
likelihood that the central bank will cut interest rates again,
probably at its March 17-18 meeting to a new low of 4%.

    That would the bank's sixth cut since it began its easing
cycle in 2019.
    The real has lost about 12% this year. 
    Stocks in Sao Paulo were led lower by carriers Gol
 and Azul because airlines have been one of
the worst hit by the outbreak as travel curbs restrict demand.
The stocks have already lost 36% and 26%, respectively, so far
this year. 
    Brazil's main stock index was down 1.5%.
    Chiles stocks fell almost 1% after three days of
gains.  
    
    Key Latin American stock indexes and currencies at 1406 GMT:
   Stock indexes            Latest    Daily %
                                      change
 MSCI Emerging Markets       1041.37     0.34
                                      
 MSCI LatAm                  2446.73    -2.42
                                      
 Brazil Bovespa            105514.32    -1.59
                                      
 Mexico IPC                        -        -
                                      
 Chile IPSA                  4325.28    -0.94
                                      
 Argentina MerVal                  -        -
                                      
 Colombia COLCAP                   -        -
                                      
                                             
       Currencies           Latest    Daily %
                                      change
 Brazil real                  4.6114    -0.70
                                      
 Mexico peso                 19.7590    -1.16
                                      
 Chile peso                      825    -1.02
                                      
 Colombia peso               3517.08    -1.20
 Peru sol                     3.4327    -0.43
                                      
 Argentina peso              62.4100    -0.08
 (interbank)                          
                                      
 
 (Reporting by Susan Mathew in Bengaluru; editing by Jonathan
Oatis)
  
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