March 20, 2020 / 2:35 PM / 9 days ago

EMERGING MARKETS-Latam currencies come off record lows, stocks rally

    By Susan Mathew
    March 20 (Reuters) - Latin American currencies lifted off
record lows on Friday tracking an uptick in sentiment as central
banks flooded world markets with liquidity and governments
ramped up support efforts.
    Brazil's real and Chile's peso rose more than
1%, with the latter on track for its best one-day gain in seven
weeks. Mexico's peso looked to break a seven session
losing streak, up 0.2%. 
    "Risk appetite has taken a very welcome turn for the better
overnight, but sentiment remains very fragile," said Ned
Rumpeltin, European head of FX strategy at TD Securities.
    "Today will be an important test to see if the 'Just sell
the rally dynamic' is still in play."
    Developing world stocks and currencies
 found some relief after the U.S. Federal Reserve
on Thursday opened currency swap lines with nine central banks,
including some in emerging markets. 
    The facility would allow them to tap up to $450 billion,
aimed at providing easy access to dollars as the coronavirus
pandemic significantly disrupts economic activity. But it may
not be enough to alleviate the credit strains at the heart of
the problem, some analysts said. 
    A Reuters poll showed the global economy is already in
recession.
    The dollar paused its march higher as the various liquidity
measures stalled a rush to the greenback, but may only be
temporary as funding needs still remain. Analysts at S&P Global
noted that volatility in financial markets across geographies
and asset classes is at record highs.
    Chile's government on Thursday announced an $11.7 billion
package of emergency measures aimed at saving jobs and
protecting small businesses. The move came just hours after the
International Monetary Fund said Latam government should take
decisive action to limit the impact from the
pandemic. 
    Santiago's IPSA stock index surged after the
stimulus announcement and continued on Friday, jumping 5.7%. 
    Brazil stocks built on Thursday's gains, up 3.5%. 
    But tensions remained as confirmed coronavirus cases in
Brazil more than doubled in two days, while a diplomatic spat
over the disease's origins between President Jair Bolsonaro's
son and the Chinese ambassador threatened relations with
Brazil's top trading partner.
    Argentina's peso, meanwhile, has remained somewhat
insulated to the market rout thanks to capital controls that
have been in place since a bailout by the IMF in 2018. 
    But the seeming out-performance masks rising tension in the
currency stemming from a divergence in the black market and
official spots rates.
    
    Key Latin American stock indexes and currencies at 1342 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     808.22     5.46
                                   
 MSCI LatAm               1557.50     4.21
                                   
 Brazil Bovespa          70748.63     3.54
                                   
 Mexico IPC                     -        -
                                   
 Chile IPSA               3258.30     5.74
                                   
 Argentina MerVal               -        -
                                   
 Colombia COLCAP           909.42     1.07
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.0301     1.43
                                   
 Mexico peso              23.9870     0.15
                                   
 Chile peso                 848.9     1.68
                                   
 Colombia peso             4057.1     0.74
                                   
 Peru sol                  3.5528     0.03
                                   
 Argentina peso           63.5400    -0.33
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Alexander
Smith)
  
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