NEW YORK, April 24 (Reuters) - Brazilian stocks and the real plummeted on Friday as political turmoil in the country added to mounting concerns over the coronavirus outbreak, while risk aversion ravaged Latin American markets.
The real BRL= sank 2.8% to a third straight record low, on track for its worst week in nearly five years with an 8.5% loss. Analysts are watching for an interest rate cut by the central bank next month.
Brazil’s benchmark stock index .BVSP dropped around 8%, eyeing its worst session since mid-March, when initial fear of the outbreak spurred panicked selling.
In addition to weak global economic readings and doubts about a possible drug to treat COVID-19, Brazil’s markets were further rattled by a report that Justice Sergio Moro will announce his resignation on Friday after President Jair Bolsonaro fired the head of the federal police.
The political row came as the coronavirus outbreak began to gather steam in Brazil. Bolsonaro has faced widespread criticism for his handling of the outbreak.
“Economists must worry about the limitations in gauging just how much the largest South American economy will cope, when even the U.S. is struggling with examining who has the infection to better assess a rightful return to normalcy,” said Juan Perez, senior currency trader at Monex Inc in Washington.
“Plus the idiosyncrasies also playing to Brazil,” Perez added, noting the firing of the head of police. “We have no faith in BRL.”
Data also showed that industrial confidence in Latin America’s largest economy crashed to record-low levels on Friday.
Other Latin American risk assets retreated, with the Mexican peso MXN= falling slightly. Stocks in the country .MXX were a touch higher.
The peso was set to lose about 5% for the week, as a crash in oil prices, coupled with a surprise rate cut by the central bank weighed on the currency.
Argentine stocks .MERV retreated as the coronavirus crises added to concerns over the country defaulting on its sovereign debt.
Argentina’s Buenos Aires province unveiled on Thursday a restructuring offer to holders of its foreign law debt similar to the one unveiled by the federal government.
The MSCI’s index of Latin American stocks .MILA00000PUS sank 7%, while currencies .MILA00000CUS fell 2.7%. Both indexes were set to mark large weekly losses.
Key Latin American stock indexes and currencies at 1503 GMT
Stock indexes
Latest
Daily % change
MSCI Emerging Markets .MSCIEF
878.08
-1.54
MSCI LatAm .MILA00000PUS
1478.22
-7.36
Brazil Bovespa .BVSP
73325.07
-7.97
Mexico IPC .MXX
34338.84
0.29
Chile IPSA .SPIPSA
3723.03
-0.68
Argentina MerVal .MERV
29115.19
-4.16
Colombia COLCAP .COLCAP
1136.80
-1.3
Currencies
Latest
Daily % change
Brazil real BRBY
5.6833
-2.76
Mexico peso MXN=D2
24.8650
-0.24
Chile peso CLP=CL
860.2
-0.19
Colombia peso COP=
4036.75
-0.61
Peru sol PEN=PE
3.3787
-0.21
Argentina peso (interbank) ARS=RASL
66.4200
-0.15
