Mexican peso at 2-week high, real slides on pandemic woes

Latin American currencies were mixed on Thursday, with the Mexican peso trading at a two-week high against the dollar, while the Brazilian real weakened as data underscored the economic damaged caused by the COVID-19 pandemic.

The peso rose 0.5% to trade at 20.3 per dollar, outperforming its Latin American peers as crude prices jumped almost 1% on hopes that OPEC and its allies will keep production curbs in place, lifting the oil exporter's currency.

The peso shed 2.7% in value against the dollar in the first quarter, still faring better than a 5.6% drop for a wider index of Latin American currencies as investors hoped that a strong US economy recovery will help the trade-reliant neighbor, Mexico.

"The spillover from the recent US stimulus package has improved Mexico's medium-term outlook and will support an export-led recovery, especially in the second half of the year," Wilson Ferrarezi, an economist at TS Lombard wrote in a note.

As per a Reuters poll of economists, the peso is likely to appreciate 1% to 20.32 per US dollar in one year. The real, meanwhile, is seen at 5.31 per US dollar in 12 months, representing an expected 8.4% gain from Wednesday but a big 3.9% drop from last month's survey.

The real currency was last trading down 1% at 5.686 per dollar.

Adding to Brazil's pandemic woes, a new COVID-19 variant similar to the one first seen in South Africa was detected as the country notched another record daily death toll.

Data showed industrial production in Brazil fell in February for the first time in 10 months, an unexpected decline that adds weight to a growing view that Latin America's largest economy shrank in the first quarter.

Investors were also nervous about the country's fiscal health after Treasury this week warned the 2021 budget approved by Congress threatens one of the government's key pillars of fiscal stability.

The Colombian and the Chilean pesos edged up against the dollar, though trading overall was thin ahead of the long weekend.

Among stocks, Brazil's Bovespa fell 0.4% on worries about the pandemic even as global stocks rallied on hopes of a strong global economic recovery. Stock markets in Mexico, Colombia and Argentina were closed on account of Easter holidays.