* Brazil holiday expected to keep volumes low
* Mexican peso up 0.4%, carry trade potential eyed
By Ambar Warrick
April 21 (Reuters) - Mexico's peso recovered from steep
losses on Wednesday, while most other Latin American currencies
were muted as surging COVID-19 cases hurt appetite for
Trading volumes in the region are expected to be limited,
due to a holiday in Brazil - Latam's largest economy.
The peso rose 0.4%, recovering from its worst day in
nearly a month as oil prices dropped after major importer India
announced new COVID-19 related curbs.
Crude exporter Colombia's peso, which fell 0.2% on
Wednesday, had also marked similar losses. Focus in the country
turned to proposed tax reforms, which could spur spending cuts
by the government if rejected.
"The combination of risk off markets and expectations of an
Iran deal growing firmer have seen crude oil markets fall
sharply from highs," analysts at TD Securities wrote in a note.
"U.S. energy demand is rising at a fast clip, and
expectations for global demand to post a roaring recovery from
the pandemic's exit are firming, but this impressive demand
growth will need materialize to push markets higher once again."
In addition to recent gains in oil, Mexico's peso has also
benefited from increased interest in carry trade, owing to its
relatively higher yield, as well as reduced volatility in
currency markets. The currency has nearly recouped all of its
losses this year.
Chile's peso hovered around more than three-month
highs, which it had hit on strength in the prices of copper, the
country's top export.
Improving sentiment over copper demand has pushed prices of
the red metal close to 10-year highs, and has helped the peso
outpace all of its Latam peers this year.
Latam stocks fell 0.8% in early trade,
tracking steep losses across the emerging market space as
risk-driven assets retreated.
Elsewhere, Turkey's lira tumbled more than 1% after
President Tayyip Erdogan lambasted the opposition over queries
into central bank sales of foreign currency, and repeated that
Turkey was fighting a "triangle of evil" of interest rates,
inflation and exchange rates.
Key Latin American stock indexes and currencies:
Latest Daily % change
MSCI Emerging Markets 1331.77 -1.18
MSCI LatAm 2391.91 -0.78
Mexico IPC - -
Chile IPSA 4953.66 -0.44
Argentina MerVal 0.00 0
Colombia COLCAP 1309.15 -0.17 Currencies Latest Daily % change
Mexico peso 19.8810 0.40
Chile peso 695.8 0.09
Colombia peso 3649.09 -0.21
Peru sol 3.6898 0.00
Argentina peso 93.0200 -0.04
(Reporting by Ambar Warrick in Bengaluru; Editing by Kirsten