Latin American stocks and currencies took a beating on Monday as investors worried that rising COVID-19 cases could deal another blow to the global economy, while sliding oil and copper prices added pressure to the region's exporters.
The safe haven US dollar caught a bid and Wall Street stocks sold off on concerns that a resurgence of COVID-19 infections this autumn could trigger another round of business shutdowns and threaten a fragile economic rebound.
The Mexican peso fell 1% and the Colombian peso shed 1.7%, leading losses among Latin American currencies as crude prices weakened on the prospects of that Libyan production would rise even as global demand stays weak.
Colombia's capital, Bogota, lifted most coronavirus-induced restrictions, but the mayor's office warned that a new outbreak in the city of 8 million is inevitable.
The Chilean peso fell to its lowest in nearly two weeks as prices of copper, the biggest source of Chile's export revenue, retreated from a two-year high.
Attention also turned to central bank meetings in Mexico on Thursday and Colombia on Friday.
After delivering five consecutive 50-basis-point reductions in interest rates to support an economy struggling with the impact of coronavirus pandemic, Bank of Mexico is expected to trim rates by only 25 basis points to 4.25% this week amid rising inflation.
"We see relative hawkishness, within an environment of easing, underpinning the carry support for MXN," said Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities.
"The market positioning implied by rates, as well as FX, suggests a muted reaction to a rate cut, though a greater than 25bp cut may drive knee-jerk, but short-lived, weakness."
S&P on Monday said it does not necessarily see another ratings downgrade to Mexico's sovereign credit rating, after a cut last March.
In Argentina, the peso hit another all-time low, over-the-counter bonds fell an average 2.2% and a J.P. Morgan risk index rose as investors priced in rising risks over the country's economic recovery following tightened capital controls last week.
Buenos Aires listed shares shaved off about 2%, while other Latam equities were also trading lower.
Petrobras was among the biggest weights on Brazil's Bovespa index after a second justice in Brazil's Supreme Court voted against allowing the state-owned oil company's planned sale of eight refineries.