EMERGING MARKETS-Mexican peso at 2-week high, real slides on virus worries

PUBLISHED: Thu, 01 Apr 2021 17:54:20 GMT

(There will be no Latin America-focused emerging market report on Friday due to the Good Friday holiday. Reuters will resume coverage on Monday, April 5. The EMEA-focused report will resume on Tuesday, April 6.) * Mexican peso trades at 2-week high * Brazil detects new virus variant * Most Latam stock markets closed on Thurs (Adds comments, updates prices throughout) By Sruthi Shankar and Shreyashi Sanyal April 1 (Reuters) – Latin American currencies were mixed on Thursday, with the Mexican peso trading at a two-week high against the dollar, while the Brazilian real weakened as data underscored the economic damaged caused by the COVID-19 pandemic. The peso rose 0.7% to trade at 19.36 per dollar, outperforming its Latin American peers as crude prices jumped almost 1% on hopes that OPEC and its allies will keep production curbs in place, lifting the oil exporter’s currency. The peso shed 2.7% in value against the dollar in the first quarter, still faring better than a 5.6% drop for a wider index of Latin American currencies as investors hoped that a strong U.S. economy recovery will help the trade-reliant neighbor, Mexico. “We expect Mexico’s financial assets and currency to be among the best performers as the country stands to benefit most among emerging markets from the large fiscal stimulus in the U.S. in our view,” economists at Capital Economics wrote in a note. As per a Reuters poll of economists, the peso is likely to appreciate 1% to 20.32 per U.S. dollar in one year. The real, meanwhile, is seen at 5.31 per U.S. dollar in 12 months, representing an expected 8.4% gain from Wednesday but a big 3.9% drop from last month’s survey. The real currency was last trading down 1.2% at 5.6995 per dollar. Adding to Brazil’s pandemic woes, a new COVID-19 variant similar to the one first seen in South Africa was detected as the country notched another record daily death toll. Data showed industrial production in Brazil fell in February for the first time in 10 months, an unexpected decline that adds weight to a growing view that Latin America’s largest economy shrank in the first quarter. Investors were also nervous about the country’s fiscal health after Treasury this week warned the 2021 budget approved by Congress threatens one of the government’s key pillars of fiscal stability. The Colombian and the Chilean pesos edged up against the dollar, though trading overall was thin ahead of the long weekend. Among stocks, Brazil’s Bovespa fell 1% on worries about the pandemic even as global stocks rallied on hopes of a strong global economic recovery. Stock markets in Mexico, Colombia and Argentina were closed on account of Easter holidays. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1335.27 1.43 MSCI LatAm 2278.18 -1.04 Brazil Bovespa 115436.95 -1.03 Mexico IPC 47246.26 -1.38 Chile IPSA 4866.53 -0.64 Argentina MerVal 47982.39 -0.225 Colombia COLCAP 1316.81 -0.79 Currencies Latest Daily % change Brazil real 5.6995 -1.24 Mexico peso 20.3123 0.54 Chile peso 717 0.40 Colombia peso 3654.2 0.13 Peru sol 3.7427 0.00 Argentina peso (interbank) 91.9800 -0.02 Argentina peso (parallel) 138 2.17 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru Editing by Alistair Bell and Marguerita Choy)

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