February 13, 2020 / 3:33 PM / 9 days ago

EMERGING MARKETS-Brazil real leads Latam FX higher, stocks pinned by jump in coronavirus cases

    * Brazilian real gains on central bank intervention 
    * Argentina warns of 'deep debt restructuring' 
    * Chilean peso hit by lower copper prices
    * Surge in coronavirus cases keeps investors risk averse

    By Shreyashi Sanyal
    Feb 13 (Reuters) - The Brazilian real led a charge among
Latin American currencies on Thursday when the central bank
announced a new intervention but stocks in the region came under
pressure as the number of coronavirus deaths and infections
surged in China. 
    The real hit a record low earlier in the session
before reversing course to trade 0.8% higher to 4.3071 against
the greenback after the central bank sold $1 billion of foreign
exchange swap contracts on the spot market, its first
intervention since late November.
    Brazil's currency was hit by data on Wednesday which showed
retail sales fell 0.1% in December, the first decline in eight
months. The real has been pressured this year by slow overseas
demand for Brazilian assets with interest rates at a record low.

    "I'm sure many people in Brazil will be happy to see any
brief relief but the bigger story is that the real is going to
continue weakening," said John Ashbourne, senior emerging
markets economist at Capital Economics. 
    MSCI's index for Latin American currencies
rose 0.4%, while its index for equities fell
0.8%.
    A surge in the number of coronavirus cases and deaths came
as a shock to investors who were hoping the outbreak would soon
come to a peak and as of Thursday, total deaths in China from
the SARS-CoV-2 virus were 1,367, up 254 from the previous day.

    "At this stage, it's still too early to tell whether or not
Covid-19 is 'under control' or not. Especially given that the
most surge in cases (due to a new counting methodology) shows
that we don't really know the actual number of infected cases,"
analysts at Rabobank wrote in a client note. 
    In Argentina, Economy Minister Martin Guzman said the
government was willing to pay its debts but did not have the
money to do so, warning of a "a deep debt restructuring" ahead.

    Argentina's peso weakened against the dollar, while
Argentine over the counter bonds open 2% lower.  
    Commodity-linked currencies including the Chilean peso
 and Colombia's peso also declined. Weakening oil
prices hit Colombia's currency, while Chile's peso was hurt by a
drop in prices of copper, its main export. 
    Declines among stocks were led by Argentina's Merval
with its 2.3% decline, while Sao Paolo stocks fell more
than 1%.   
    Latin American stock indexes and currencies at 1510 GMT
   Stock indexes            Latest     Daily % change
 MSCI Emerging Markets        1105.33           -0.39
                                       
 MSCI LatAm                   2787.49           -0.84
                                       
 Brazil Bovespa             115182.87           -1.28
                                       
 Mexico IPC                  45045.09           -0.65
                                       
 Chile IPSA                   4640.39           -0.59
                                       
 Argentina MerVal            39044.72          -2.232
                                       
 Colombia COLCAP              1656.81           -0.16
                                       
                                                     
      Currencies            Latest     Daily % change
 Brazil real                   4.3203            0.66
                                       
 Mexico peso                  18.6337           -0.11
                                       
 Chile peso                     797.2           -0.90
                                       
 Colombia peso                 3389.5           -0.10
                                       
 Peru sol                       3.382           -0.12
                                       
 Argentina peso               61.3300           -0.16
 (interbank)                           
                                       
 

 (Reporting by Shreyashi Sanyal in Bengaluru; editing by Grant
McCool)
  
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