Cooper Metals – EMERGING MARKETS-Latam FX hits over 5-month low as ‘stagflation’ fears grow

    * Mexican peso hits 6-month low, auto production slumps
    * Brazil's real at over 5-month low
    * Latam stocks fall in early trade 

    By Ambar Warrick and Federica Urso
    Oct 6 (Reuters) - Latin American currencies slipped to a
more-than five-month low on Wednesday following weak economic
data and as a spike in oil prices stoked fears of overheated
inflation. 
    MSCI's index of Latin American currencies
slipped 0.8% to its lowest level since late-April, as investors
feared that the jump in oil prices could keep price pressures
elevated and throttle economic growth in emerging markets. 
    "There are certain emerging markets countries that will
benefit, most particularly the oil producing countries, but on a
broad note these recent spikes in oil prices are negative for
emerging markets as they further fuel the stagflation fear,"
said Jakob Christensen, chief analyst, head of EM research at
Danske Bank. 
    Mexico's peso dropped as much as 1.6% to a more-than
six-month low of 20.8807 to the dollar, as data showed
production in the country's major automobile sector fell sharply
in September, while auto exports also slowed.
    While higher oil prices usually benefit the peso, given
Mexico's large oil exports, the currency slumped as market
volatility saw investors move out of using the currency for
carry trade. 
    Brazil's real lost 0.6% to reach a more-than
five-month low as data showed retail sales fell in August due to
the lingering effects of the COVID-19 pandemic. 
    A separate reading showed automobile production rose in
September, but remained under pressure from supply shortages of
crucial parts.
    Investors were now also awaiting a vote next week over a
proposed fuel tax reform - a hot political topic in Brazil, as
President Jair Bolsonaro seeks to calm frustrations over rising
costs.
    Currencies of copper exporters Chile and Peru
fell 0.7% and 0.1% respectively as prices of the red metal
slumped on concerns over slowing Chinese demand.
    In Peru, the government struck a deal to avoid road
blockades and potential production halts at the Las Bambas
copper mine, which accounts for some 2% of global copper supply.

    Fears of widespread defaults in China's massive property
market, coupled with hawkish cues from the U.S. Federal Reserve,
have weighed on emerging markets in recent sessions.
    Danske Bank's Christensen said monetary policy tightening in
the West would be negative for EMs as "funding costs become more
expensive," and that markets were "not out of the woods yet"
with regards to China's potential debt crisis. 
    Latin American stocks fell in early trade, tracking weak
cues from the U.S. market as investors fretted over slowing
economic growth. 
    Key Latin American stock indexes and currencies:
    
                              Latest      Daily % change
 MSCI Emerging Markets         1224.45                -0.98
                                        
 MSCI LatAm                    2159.78                -2.24
                                        
 Brazil Bovespa              108313.08                -1.94
                                        
 Mexico IPC                   50723.63                -0.65
                                        
 Chile IPSA                    4146.01                -1.89
                                        
 Argentina MerVal                    -                    -
                                        
 Colombia COLCAP               1373.26                -0.72 Currencies             Latest      Daily % change
 Brazil real                    5.5159                -0.60
                                        
 Mexico peso                   20.7388                -0.90
                                        
 Chile peso                      816.8                -0.72
                                        
 Colombia peso                 3787.51                -0.17
 Peru sol                        4.134                -0.12
                                        
 Argentina peso                98.9200                -0.01
 (interbank)                            
                                        
 

 (Reporting by Ambar Warrick;
Editing by Alison Williams)