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EMERGING MARKETS-Latam FX muted as resurgence in virus cases weighs

Ambar Warrick
·2 min read
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* Optimism over copper helps Chilean, Peruvian FX * Virus resurgence in Brazil a cause of concern By Ambar Warrick April 7 (Reuters) - Latin American currencies marked small gains on Wednesday as the dollar appeared to have stabilized after recent losses, although a second wave of regional COVID-19 infections weighed on sentiment. The U.S. dollar hovered around two-week lows with the weakness helping spur some gains in emerging markets. Brazil's real was largely flat to the dollar, while Chile's peso and the Peruvian sol rose on optimism over copper prices. Virus-related deaths in Brazil, Latin America's largest economy, are forecast to surpass the worst of a record January wave in the United States, as daily fatalities climbed above 4000 a day. Still, the country's officials expect the economy to be back on track in two to three months on the heels of an accelerating vaccination program. Brazil's initial difficulties with procuring vaccinations, as well as concerns over mounting fiscal debt have seen the real widely underperform most of its emerging market peers this year. Chile's peso was supported by data showing a large trade surplus in March, with copper exports rising substantially. Gains in copper prices have helped the peso somewhat offset local economic ructions, as the country shut its borders recently due to a rise in virus cases. "While concerns remain that shipments could be delayed, the risk to metals supply likely remains mitigated. In turn, reflationary tailwinds remain the primary driver supporting LME metals, particularly following the strong U.S. jobs report," analysts at TD Securities wrote in a note. Data showing a recovery in China's service sector has also improved the outlook for copper, given that the country is the world's top importer of the red metal. Colombia's peso rose slightly on gains in oil prices. Mexico's peso and Argentina's peso were both flat. Both countries on Wednesday called for debt relief for middle income countries, saying the proposal could prevent a debt crisis emerging on the back of the pandemic. Emerging markets are expected to have a mixed recovery from the pandemic, with economies in Asia expected to outpace their peers. Latam stocks were muted in early trade. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1338.90 -0.59 MSCI LatAm 2347.80 0.26 Brazil Bovespa 118071.04 0.49 Mexico IPC - - Chile IPSA 4846.16 -0.3 Argentina MerVal - - Colombia COLCAP 1323.19 -0.09 Currencies Latest Daily % change Brazil real 5.5920 0.15 Mexico peso 20.1763 -0.05 Chile peso 715 0.35 Colombia peso 3632.89 0.06 Peru sol 3.626 0.20 Argentina peso 92.3300 -0.04 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Kirsten Donovan)