* Colombian peso worst performer among currencies
* Hard to turn bullish on oil now, economist says
* Chilean peso drops as copper prices tumble
By Ambar Warrick
April 21 (Reuters) - Latin American currencies dropped on
Tuesday as plummeting oil prices served as another reminder of
the coronavirus' economic impact, with crude-sensitive
currencies retreating sharply.
The Mexican peso fell about 1%, while the Colombian
peso fell 1.8%. Both currencies have marked large losses
since Monday after front-month U.S. oil prices fell into
negative territory. International oil prices also dropped as the
novel coronavirus eroded global demand.
Mexico entered its most serious stage in the spread of the
virus, which has been intensifying in the country. Lockdowns
across Latin America to curb the spread of the virus are set to
erode business activity in the near term.
While lower oil prices would likely benefit crude-importing
emerging markets, the plunge in prices saw investors sharply
reducing their exposure to risk assets in favor of the U.S.
dollar.
"With demand expectations depressed and macro visibility
restricted, it is hard even for contrarians to turn bullish on
oil right now," wrote Konstantinos Venetis, senior economist at
TS Lombard.
"That said, it is also hard to see prices staying so low
(and the contango so wide) for long, even as further downside
volatility cannot be ruled out."
The shock from negative prices was also felt in the base
metal market, with the Chilean peso retreating in tandem
with a drop in prices of copper, the country's top export.
Argentina's peso weakened as the country ordered the
issuance of $400 million in foreign currency Treasury bills on
Tuesday, funds that could help bridge upcoming payments amid a
major debt crunch.
The country has been struggling to negotiate with creditors
over the repayment of its foreign debt, having recently unveiled
a proposal to a bulk of its creditors late last week.
Latin American equities were also weaker, with bourses in
Mexico and Chile shedding 1% and 2%,
respectively.
The MSCI's index of regional stocks fell
1.3%.
Markets in Brazil, the region's largest economy, were closed
for a holiday.
Key Latin American stock indexes and currencies at 1428 GMT
Stock indexes Latest Daily % change
MSCI Emerging Markets 879.05 -2.26
MSCI LatAm 1613.39 -1.33
Mexico IPC 34093.00 -1.11
Chile IPSA 3670.52 -2.08
Argentina MerVal 30190.11 -1.132
Colombia COLCAP 1156.67 -1.94
Currencies Latest Daily % change
Mexico peso 24.2916 -1.04
Chile peso 863 -1.04
Colombia peso 4040.4 -1.80
Peru sol 3.4158 -0.41
Argentina peso 66.0850 -0.16
(interbank)
(Reporting by Ambar Warrick in Bengaluru; Editing by Steve
Orlofsky)
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