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EMERGING MARKETS-Latam currencies weaken as coronavirus cases rise

Susan Mathew
·3 mins read

By Susan Mathew Aug 17 (Reuters) - Latin American currencies weakened on Monday with Mexico's peso breaking a four-session winning streak as number of cases of the novel coronavirus in the region rose, while the region's main stock indexes traded mixed. Brazil on Sunday registered 620 new deaths while the total number of infections were well over 3.3 million. In Mexico, the cases tally stood at 522,162. Brazil's real lost 0.5% against a weaker dollar. FX strategists at JP Morgan said the recent political uncertainty in the country will see the real underperforming regional peers in the near term. Last week two more cabinet secretaries resigned from the government, unhappy with the pace of reforms. A central bank survey, however, showed Brazil's 2020 economic growth outlook year brightened for a seventh week in a row, now expected to contact only 5.5% compared with the previous 6.5% estimate. Mexico's peso fell 0.2%. Late on Friday, Mexico's central bank Deputy Governor Jonathan Heath said there is still room to cut the benchmark interest rate but the decision will depend on how economic indicators evolve. The central bank had cut the key interest rate by 50 basis points to 4.5% last week - the lowest level in four years. Chile's peso extended losses to a third straight session, even as prices of its main export good, copper, rose. Investors this week will be watching for minutes of the U.S. Federal Reserve's previous meeting or any clues about an anticipated shift in the policy outlook. Some relief, meanwhile, came from a scheduled review of a Phase one U.S.-China trade deal being postponed, leaving the deal intact for the time being. Among stocks, Brazil's Bovespa swung in volatile trade, last trading down 0.3% as financial heavyweights dragged. Mexico's IPC index notched over two-month highs before retreating. "Outside of China, the rest of emerging markets (stocks) do not appear as attractive," said equity strategists at JP Morgan. "The relative performance of EM vs developed markets is closely tied to EM currencies, which has struggled to pick up despite the recent dollar weakness." "EM ex-China is largely value driven. Value needs to be outperforming growth in order for EM ex China to work, which we believe is unlikely in the current low-yield environment." Argentina and Colombian markets were closed for local holiday. Argentina's government on Sunday officially unveiled its amended bond restructuring offer and said creditors would have until August 28 to approve it. It filed the offer to the U.S. Securities and Exchange Commission on Monday. Key Latin American stock indexes and currencies at 1431 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1099.55 0.58 MSCI LatAm 1996.86 -0.95 Brazil Bovespa 101072.99 -0.28 Mexico IPC 38882.79 -0.17 Chile IPSA 4041.19 0.6 Currencies Latest Daily % change Brazil real 5.4539 -0.50 Mexico peso 22.0220 -0.22 Chile peso 805 -1.01 Peru sol 3.5767 -0.17 (Reporting by Susan Mathew in Bengaluru;)