EMERGING MARKETS-Latam FX bounces after dollar falls on U.S. Fed's rate cut
* Goldman Sachs slashes Brazil, Mexico 2020 GDP forecasts * Argentina confirms first coronavirus case * Brazil's BRF sees 2020 "volatility," shares fall (Adds comments, updates prices throughout) By Shreyashi Sanyal March 3 (Reuters) - Most Latin American currencies rose on Tuesday, as the U.S. dollar sank after the Federal Reserve cut interest rates in an emergency move to help the world's largest economy fight the blow from a fast-spreading coronavirus. The U.S. central bank said it was cutting rates by half a percentage point to a target range of 1.00% to 1.25%, sending the dollar to a six-week low, before it pared losses. "What the Fed did today was certainly positive for emerging market assets because it takes away a very strong support that the dollar had, which is yields," said Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities. "This also sort of signals that there is an aggressive monetary easing stance on the Fed's mind." Most emerging market currencies have been under pressure recently from fears of the global economic impact of the coronavirus outbreak, which drove investors away from riskier assets and into the perceived safety of gold, the U.S. dollar and Treasuries. MSCI's index for Latin American currencies rose 0.2%, but Brazil's real lagged its peers and touched all-time lows. The Chilean and Colombian pesos gained, and the Peruvian sol also firmed. Economists at Goldman Sachs slashed their 2020 economic growth forecasts for Brazil and Mexico, citing the expected impact from the coronavirus. "Central banks (in Latin America) could use the Fed's decision as an excuse to lower interest rates further, despite rising inflation, and we might see Banxico also respond with more cuts," said Jason Tuvey, senior emerging markets economist at Capital Economics. Mexico's peso traded in a tight range against the dollar. The currency has fallen more than 2% in 2020 so far. Argentina's peso eased as Health Minister Gines Gonzalez Garcia confirmed the South American country's first case of coronavirus. Regional stocks fell, with Sao Paulo stocks leading declines. BRF SA slid 6.5% after the food processor said 2020 will likely be "a volatile" year given uncertainty related to grain prices, forex variations and epidemics like the new coronavirus. Chile stocks rose 0.1%, but gains were capped by a 14% tumble in shares of SQM, the world's No. 2 lithium producer. The company reported a slump in profits in the last quarter of 2019 and warned that early 2020 sales in China could be hit by the coronavirus. Key Latin American stock indexes and currencies at 1929 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1026.13 0.89 MSCI LatAm 2461.53 -0.76 Brazil Bovespa 104962.28 -1.56 Mexico IPC 42608.80 1.05 Chile IPSA 4288.76 0.12 Argentina MerVal 36060.59 -0.531 Colombia COLCAP 1529.42 -0.46 Currencies Latest Daily % change Brazil real 4.5105 -0.55 Mexico peso 19.3856 0.07 Chile peso 807.1 0.68 Colombia peso 3461.22 -0.04 Peru sol 3.422 0.56 Argentina peso (interbank) 62.3075 -0.08 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru; Editing by Alistair Bell and Leslie Adler)
