The decline in energy and metals prices caused by concerns about the coronavirus took a heavy toll on the region’s financial markets in the last few weeks. The Brazilian and Chilean currencies have been the worst performers in the emerging world this month, and equities across much of the region have tumbled. Mexico has been the only major country to ride out the storm. There’s a lot of uncertainty at this stage, but history suggests that commodity prices (and Latin American financial markets) tend to recover pretty quickly as and when epidemics are brought under control. So long as that happens, we think the Chilean peso and Peruvian sol will outperform this year, but the Brazilian real will remain weak.
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