* MSCI's Latam stocks index down 22% for week
* Brazil's real comes off record lows
* Chile stocks fall despite fiscal measures
(Adds details, updates prices)
By Ambar Warrick and Susan Mathew
March 20 (Reuters) - Latin American stocks marked their
worst week since 2008 as the economic outlook for the region
worsened in face of the coronavirus outbreak, while most
currencies trended lower on Friday.
Brazil stocks fell 2.4%, shedding earlier gains
after Latin America's largest economy slashed its 2020 economic
growth forecast to zero from 2.1% previously, due to the
perceived hit from the outbreak.
The country also declared a state of emergency over the
virus.
The MSCI's index of Latin American stocks
was down roughly 22% for the week, its worst since 2008. Stocks
in Mexico and Chile also retreated for the day.
Week-long losses in currencies were somewhat curbed by a
pause in the dollar's rally, after major central banks pledged
dollar liquidity measures amid a mad rush to the greenback.
The real rose about 1%, while the Mexican and
Argentine pesos fell 0.6% each. The MSCI's index
of Latin American currencies, while ticking up
slightly for the day, was set for its worst week since
late-2016.
"In Brazil, its central bank appears well-prepared to deploy
its ample intervention potential to ensure the liquidity of FX
markets," Gustavo Rangel, chief economist, LATAM, at ING, wrote
in a note.
" Ultimately, much should depend on the ability of local
economies to prevent the ongoing liquidity crunch... But not
every country has the capacity to deploy resources effectively
while ensuring that the necessary short-term fiscal weakening
does not translate into permanent damage."
A Reuters poll showed the global economy is already in
recession, which bodes poorly for the risk appetite-driven
assets in emerging markets.
Developing world stocks and currencies
found some short-lived relief after the U.S.
Federal Reserve on Thursday opened currency swap lines with nine
central banks, including some in emerging markets.
Chile's government Thursday announced an $11.7 billion
package of emergency measures aimed at saving jobs and
protecting small businesses. The move came just hours after the
International Monetary Fund said governments should take
decisive action to limit the pandemic's impact.
In Brazil, confirmed coronavirus cases more than doubled in
two days, while a diplomatic spat over the virus' origins
between President Jair Bolsonaro's son and the Chinese
ambassador threatened relations with Brazil's top trading
partner.
Argentina's peso, which weakened about 1% for the week, has
remained somewhat insulated to the market rout thanks to capital
controls that have been in place since a bailout by the IMF in
2018.
But the seeming out-performance masks rising tension in the
currency stemming from a divergence in the black market and
official spots rates.
Key Latin American stock indexes and currencies at 1926 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 802.10 4.66
MSCI LatAm 1474.11 -1.37
Brazil Bovespa 66576.74 -2.57
Mexico IPC 34062.93 -3.08
Chile IPSA 3075.96 -0.18
Argentina MerVal 23776.78 4.945
Colombia COLCAP 916.57 1.87
Currencies Latest Daily %
change
Brazil real 5.0467 1.10
Mexico peso 24.2220 -0.82
Chile peso 863.1 0.01
Colombia peso 4118.75 -0.77
Peru sol 3.5278 0.74
Argentina peso 63.7000 -0.58
(interbank)
(Reporting by Susan Mathew in Bengaluru; Editing by Alexander
Smith and Tom Brown)
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