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EMERGING MARKETS: Latam stocks, FX buoyed by global stimulus

NEW YORK, Mar 25 (Reuters) - Latin American currencies weakened again on Thursday, but the U.S. Federal Reserve's move to give nine central banks, including Brazil's and Mexico's, access to dollars helped them cut some losses.

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Mexico’s peso firmed almost 2%, steadily rising off all-time lows and most Latin American currencies made small gains on Wednesday as global stimulus measures buoyed sentiment.

Central banks and governments around the world have taken drastic measures to cushion the blow from the coronavirus pandemic, most notably the U.S. Federal Reserve’s limitless quantitative easing and Washington’s $2 trillion stimulus package that awaits passage by Congress.

“All this action is unprecedented for a condition that is as well,” said Juan Perez, senior foreign exchange trader and strategist at Tempus Inc. “The 2008 crisis and World Wars saw a lot of money move too, but this is giving out while no one can act.”

All the stimulus announcements eased the rush to the dollar. Mexico’s peso extended gains to a second day as data on Wednesday showed Mexican retail sales rose 0.5 percent in January from December.

In Brazil, data showed services activity grew more than expected year-on-year in January, while according to a mid-month measure of consumer inflation virtually evaporated in March, as air travel costs plunged.

The real firmed 0.6%. Separate data showed Brazil posted its widest current account deficit in over four years in February.

But presidents of both Mexico and Brazil have been criticized for being lax about the outbreak, urging citizens to go out to restaurants and to work, while an increasing number of countries are going into lockdowns to contain the spread of the virus.

“Yes, you do want to minimize inactivity, but Latam giants like Brazil and Mexico must join the chorus if those economies are to be perceived as healthy later on,” Tempus Inc’s Perez said.

“Your economy must look fully ready to go back into full throttle. That will only happen when it is guaranteed that is safe to work and socialize.”

In line with a sustained recovery on Wall Street, most regional stocks rose between 0.6% and 6.6%. Gains in Brazil’s Bovespa index were limited by decline in shares of oil firm Petrobras as crude prices fell.

Chile’s IPSA index jumped almost 4% to climb further away from lows since 2009.

In Argentina, the peso declined. Reuters exclusively reported that soybean deliveries to crushing plants have been severely cut in Argentina, the world’s top supplier of soymeal livestock feed, as the country reacts to the coronavirus pandemic.

Key Latin American stock indexes and currencies at 1500 GMT:

Key Emerging Markets Chart

 

Reporting by by Susan Mathew in Bengaluru; Editing by Alistair Bell

 

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