Latin American currencies weakened on Thursday’s; Brazil Real slides to a record low
Latin American stocks and currencies weakened on Thursday, with Brazil’s real slipping to yet another record low, as the rapid spread of the coronavirus sapped risk appetite and investors worried about the scale of the economic fallout.
Brazil’s real continued its slide, down 0.6% to a new low of 4.6114 to the dollar, while Mexico’s peso lost more than 1% in what could be its third straight session of losses.
Colombia’s currency slid 1.5%, tracking losses in oil prices, while Chile’s peso touched a three-month low despite a rise in its main export good, copper.
The weakness in regional currencies was in line with broader emerging market peers and came even as the dollar languishes at two-month lows.
After the U.S. Federal Reserve delivered a 50-basis-point emergency cut on Tuesday, expectations have risen that other central banks might follow suit as the virus spreads aggressively across the globe, forcing whole cities to shut down and bringing economic activity in those areas to a standstill.
The number of infected cases globally is fast approaching 100,000, and the death toll has climbed to over 3,000.The outbreak has crushed hopes for stronger growth this year and will hold 2020 global output gains to their slowest pace since the 2008-2009 financial crisis, International Monetary Fund Managing Director Kristalina Georgieva said on Wednesday.
In Brazil, the deteriorating economic outlook for 2020, exacerbated in recent days by coronavirus fears, has raised the likelihood that the central bank will cut interest rates again, probably at its March 17-18 meeting to a new low of 4%.
That would the bank’s sixth cut since it began its easing cycle in 2019.The real has lost about 12% this year.