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EMERGING MARKETS-Brazil's real jumps on central bank reassurance

Shreyashi Sanyal and Susan Mathew

* Brazil ready to increase FX intervention -central bank chief * Currencies of oil-exporters Mexico, Colombia rise * Argentina creditor says default hard to avoid on Friday (Adds comments, updates prices) By Shreyashi Sanyal and Susan Mathew May 21 (Reuters) - Brazil's real jumped on Thursday after the central bank said it remained ready to increase support for the currency and Mexico's peso hit its highest in nearly two months as oil prices rallied. But as the novel coronavirus speeds through the region, analysts said the Latin American economy may shrink at a record pace this year and take at least two more years to recover. Brazil is seen soon becoming the second-worst hit globally as the number of cases approaches 300,000, while Mexico reported a surge in cases after reopening its economy. Currencies of Mexico and Colombia both rose around 1.3% as recovering demand lifted oil prices. Brazil's real jumped 2% after central bank President Roberto Campos Neto said the bank would dip into its large pool of foreign exchange reserves and continue intervening in the currency market if needed. The currency has lost close to 30% of its value against the dollar so far this year. Amid increasing political uncertainty in Brazil, the government's remaining 'super minister,' Economy Minister Paulo Guedes, has the full support of his team, a senior ministry official said on Wednesday. Mexican President Andres Manuel Lopez Obrador said the government was open to dialogue about rule changes in the electricity sector that had sent the stock market plunging. Mexico's IPC index fell 1%. Most Latam bourses rose with Brazil's benchmark index hitting a three-week high. "We think Latin America offers the most value in EM equities – Bovespa likely the best rebound candidate," said Goldman Sachs strategists in a note. "Latin America's underperformance versus the rest of EM since January has opened up significant value across assets on both a relative and an absolute basis," they said, also highlighting tail-winds from an expected pick-up in commodity prices in the second half of 2020. Argentina's peso slid deeper into record low territory as the government probably cannot avoid defaulting on a bond payment due on Friday. But one of its creditors, Greylock Capital, said a deal to restructure $65 billion in foreign debt should still be achievable. Latin American stock indexes and currencies at 1946 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 929.82 -0.18 MSCI LatAm 1675.76 2.32 Brazil Bovespa 83067.44 2.15 Mexico IPC 35650.45 -1.05 Chile IPSA 3755.08 0.67 Argentina MerVal 41389.04 3.969 Colombia COLCAP 1068.45 -0.36 Currencies Latest Daily % change Brazil real 5.5776 1.99 Mexico peso 22.9010 1.27 Chile peso 802.7 0.00 Colombia peso 3759.97 1.21 Peru sol 3.4108 -0.30 Argentina peso (interbank) 68.0800 -0.12 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru; Editing by Andrea Ricci and Grant McCool)