* Brazil ready to increase FX intervention -central bank
chief
* Currencies of oil-exporters Mexico, Colombia rise
* Argentina creditor says default hard to avoid on Friday
(Adds comments, updates prices)
By Shreyashi Sanyal and Susan Mathew
May 21 (Reuters) - Brazil's real jumped on Thursday after
the central bank said it remained ready to increase support for
the currency and Mexico's peso hit its highest in nearly two
months as oil prices rallied.
But as the novel coronavirus speeds through the region,
analysts said the Latin American economy may shrink at a record
pace this year and take at least two more years to recover.
Brazil is seen soon becoming the second-worst hit globally
as the number of cases approaches 300,000, while Mexico reported
a surge in cases after reopening its economy.
Currencies of Mexico and Colombia both rose
around 1.3% as recovering demand lifted oil prices.
Brazil's real jumped 2% after central bank President
Roberto Campos Neto said the bank would dip into its large pool
of foreign exchange reserves and continue intervening in the
currency market if needed. The currency has lost close to 30% of
its value against the dollar so far this year.
Amid increasing political uncertainty in Brazil, the
government's remaining 'super minister,' Economy Minister Paulo
Guedes, has the full support of his team, a senior ministry
official said on Wednesday.
Mexican President Andres Manuel Lopez Obrador said the
government was open to dialogue about rule changes in the
electricity sector that had sent the stock market plunging.
Mexico's IPC index fell 1%.
Most Latam bourses rose with Brazil's benchmark index
hitting a three-week high.
"We think Latin America offers the most value in EM equities
– Bovespa likely the best rebound candidate," said Goldman Sachs
strategists in a note.
"Latin America's underperformance versus the rest of EM
since January has opened up significant value across assets on
both a relative and an absolute basis," they said, also
highlighting tail-winds from an expected pick-up in commodity
prices in the second half of 2020.
Argentina's peso slid deeper into record low
territory as the government probably cannot avoid defaulting on
a bond payment due on Friday. But one of its creditors, Greylock
Capital, said a deal to restructure $65 billion in foreign debt
should still be achievable.
Latin American stock indexes and currencies at 1946 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 929.82 -0.18
MSCI LatAm 1675.76 2.32
Brazil Bovespa 83067.44 2.15
Mexico IPC 35650.45 -1.05
Chile IPSA 3755.08 0.67
Argentina MerVal 41389.04 3.969
Colombia COLCAP 1068.45 -0.36
Currencies Latest Daily %
change
Brazil real 5.5776 1.99
Mexico peso 22.9010 1.27
Chile peso 802.7 0.00
Colombia peso 3759.97 1.21
Peru sol 3.4108 -0.30
Argentina peso (interbank) 68.0800 -0.12
(Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru;
Editing by Andrea Ricci and Grant McCool)
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