October 30, 2019 / 3:10 PM / 18 days ago

EMERGING MARKETS-Chile peso at new low on slow mining data, unrest; other Latam FX drop too

    By Susan Mathew
    Oct 30 (Reuters) - Chile's peso slumped on Wednesday to an
all-time low amid poor mining data and domestic unrest, while
other Latin American currencies slipped as investors braced for
interest rate decisions from the United States and Brazil.
    Chile's peso slid 1.5% to 737.53 to the dollar, an
all-time low and stocks tumbled 3.1% to a eight-week trough. The
country's manufacturing production dropped in September from a
year ago amid a decrease in mining production, government data
showed.
    Analysts worry about deteriorating economic activity in
Chile - the world's biggest producer of copper as a recent
political crisis has seen union workers at BHP's Escondida
copper miner go on strike.
    President Sebastian Pinera said Chile will suspend hosting
the Asia Pacific summit next month. The United States and China
were expected to sign a partial trade agreement at the summit,
but Reuters reported U.S. officials warning the deal may not be
ready by then.
    This had hit sentiment globally. On Wednesday, Wall Street
traded flat, while most Latam shares slipped.
    The dollar remained steady as investors expected the Federal
Reserve to cut U.S. interest rates for the third time this year
and awaited comments by the Fed Chair Jerome Powell. The
decision is due at 2 p.m. ET.
    "We look for the Fed to temporarily pause before resuming
rate cuts in the first quarter of 2020," said Ned Rumpeltin,
European head of FX strategy at TD Securities. 
    A more patient Fed would strengthen the dollar, he said,
keeping emerging market currencies under pressure.
    In Brazil, the central bank is expected to slash the key
rate by 50 basis points, also for the third time this year. The
real slipped 0.7%, headed for its biggest daily drop in
two-weeks.
    "A further rate cut in December is... no fait accompli,"
said You-Na Park-Heger, an FX and EM analyst with Commerzbank,
in a note. 
    "Real interest rates have now reached historic lows and only
offer limited scope for periods of increased risk perception on
the financial markets," she said. 
    Brazil's decision is due at 1800 GMT.
    Data from Mexico showed the economy grew by 0.1 percent in
the third quarter from the previous three-month period, short of
market expectations. The peso slipped 0.2%, headed for
its third daily decline.
    Brazil's bovespa stock index fell 0.7% with card
processor Cielo SA down after poor quarterly results
while the Brazilian unit of lender Santander fell
despite beating estimates on results as its Spanish parent
 posted a 75% decline in third-quarter profit.

    Among other earnings, Colombia's state-run oil company
Ecopetrol's third quarter net profit rose 8.5% from the
year-ago. The stock was down 0.16%.
            
    Key Latin American stock indexes and currencies at 1441 GMT:
    
        Stock indexes                 Latest      Daily %
                                                   change
 MSCI Emerging Markets                 1038.97         -0.46
 MSCI LatAm                            2771.82         -1.39
 Brazil Bovespa                      106951.21         -0.56
 Mexico IPC                           43773.04         -0.18
 Chile IPSA                            4729.64          -3.1
 Argentina MerVal                     32547.07         0.009
 Colombia IGBC                        13249.82         -0.22
                                                            
           Currencies                 Latest      Daily %
                                                   change
 Brazil real                            4.0262         -0.59
 Mexico peso                           19.1747         -0.31
 Chile peso                              737.3         -1.37
 Colombia peso                         3386.98         -0.41
 Peru sol                               3.3508         -0.44
 Argentina peso (interbank)            59.4000          0.10
                                                
 
 (Reporting by Susan Mathew in Bengaluru; Editing by David
Gregorio)
  
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