By Susan Mathew
Feb 24 (Reuters) - Mexico's peso touched an 11-week low on
Monday, leading a decline in Latin American currencies amid a
global sell-off spurred by a surge in the number of coronavirus
cases outside China.
Fears of a pandemic rose after Italy, South Korea and Iran
reported a sharp rise in the number of new cases and deaths,
while other Middle East countries also reported new cases.
"It's spreading fast and markets are reacting to the
uncertainty," said Win Thin, head of emerging market currency
strategy at Brown Brothers Harriman.
With markets in Brazil and Argentina closed for local
holidays until Tuesday, MSCI's index of Latam currencies
fell 0.4%, while its stocks counterpart
slipped 1.2%, on course for its third straight
session of losses.
Mexico's peso slumped 1.4%, in what could be its a
third session running of declines. Stocks in the country fell
2.6% to their lowest in almost two months.
Mexican consumer price inflation came in slightly below
forecasts in the first half of February but remained above the
central bank's target rate, data showed on Monday.
Markets has experienced intermittent sparks of optimism over
the last two weeks on hopes that the coronavirus outbreak might
pass over by April, with falling number of new cases in China
lending weight to the assessment.
But the fast-paced spread rate of the outbreak raised fears
that more travel curbs and suspended activity at factories and
retail outlets in affected areas will lead to a wider hit to
global demand and supply, prolonging well into the second
quarter.
"The market is still looking at the base-case of a V-Shape -
a steep slump and a sharp recovery. But the fact is that people
still don't have a handle on how bad this can get," BBH's Thin
said.
"It took six months for the WHO to declare SARS contained.
That's an eternity for markets, so we could have a prolonged
period of volatility and risk off sentiment," he said referring
to the outbreak in 2003.
A 4.5% slide in oil price knocked Colombia's peso,
putting it on track for its steepest one-day drop in nine
months.
The International Monetary Fund on Friday trimmed Colombia's
growth for the year saying the country needs a more durable
fiscal adjustment to meet its financial targets, adding that the
central bank should increase reserves to protect against
external shocks.
Chile, the world's largest producer of copper, saw its
currency give up 1% as prices of the red metal fell on
the London Metals Exchange.
Santiago-listed stocks slumped 2% to their lowest
in more than three months.
Key Latin American stock indexes and currencies at 1500 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1055.79 -2.62
MSCI LatAm 2673.44 -1.24
Mexico IPC 43654.66 -2.56
Chile IPSA 4435.19 -2.15
Colombia COLCAP 1609.92 -1.32
Currencies Latest Daily %
change
Mexico peso 19.1507 -1.34
Chile peso 810.5 -1.01
Colombia peso 3423.5 -1.33
Peru sol 3.4028 -0.52
(Reporting by Susan Mathew in Bengaluru;)
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