* Peruvian sol extends losses to a fifth straight session
* Chile's peso slips 1.3%, stocks drop 2%
* Brazil's real rallies in catch up trade
* Moody's warns Brazil's extra COVID-19 spend is credit
(Recasts, updates prices)
By Ambar Warrick and Susan Mathew
April 22 (Reuters) - Brazil's real rose on Thursday,
catching up with its regional neighbors after a holiday, while
Peru's sol posted its worst day in more than one year as a new
poll showed leftist presidential candidate Pedro Castillo
keeping his lead.
Chile's peso lost 1.3%, coming off three-month highs
as it tracked a dip in copper prices. Mining unions in Chile
have threatened to protest if the government does not drop a bid
to block pensions withdrawal, having already approved two
Chile's central bank said this week that a third withdrawal
risked generating "a significant increase in the Chilean
economy's risk profile."
The Chilean stocks benchmark fell 2% and logged
its worst session in two months.
The real jumped 1.5% to a one-month high after
a holiday on Wednesday. Most other Latin American currencies had
firmed then, owing to a weaker dollar in the light of falling
U.S. Treasury yields.
The Brazilian government's decision to exclude extra
pandemic-fighting expenditure this year from the spending cap
framework is a negative development for the country's sovereign
credit profile, ratings agency Moody's warned on Thursday.
A damaging new wave of COVID-19 infections, especially in
Brazil, has held back gains in emerging market currencies.
"Severe COVID-19 outbreaks across Latin America will put a
brake on the region's economic recovery in Q2," wrote the Latam
economics team at Capital Economics in a note.
"We still think that Latin America will emerge from this
crisis in worse shape than other EM regions. Central banks will
keep monetary policy looser than is currently priced into
Peru's sol plummeted 1.2% to near record lows,
extending losses into a fifth straight session after Castillo
was seen having a 15 percentage point advantage over his
right-wing rival Keiko Fujimori.
Castillo, seeking to calm markets, said he would not
nationalize companies and would respect the country's legal
Mexico's peso fell 0.2%, as inflation rose faster
than expected in the first half of April to the highest level in
more than three years, far surpassing the central bank's target
Still, the peso is likely to be supported by steady interest
rates, which the central bank is expected to keep at 4% longer
than previous estimates.
Among stocks, Brazil's Bovespa extended losses to a
third session, while Colombia's COLCAP marked its
fifth straight day in the red.
Mexico's IPC index, meanwhile, rose for the third
straight session to scale 2-1/2 year highs.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
MSCI Emerging Markets 1341.88 0.38
MSCI LatAm 2409.96 0.57
Brazil Bovespa 119698.06 -0.3
Mexico IPC 49087.34 0.45
Chile IPSA 4830.37 -2.06
Argentina MerVal 47235.99 -0.799
Colombia COLCAP 1297.58 -0.58
Currencies Latest Daily %
Brazil real 5.4665 1.48
Mexico peso 19.9383 -0.33
Chile peso 706.4 -1.20
Colombia peso 3633.35 -0.57
Peru sol 3.7547 -1.23
Argentina peso 93.0700 -0.03
(Reporting by Ambar Warrick in Bengaluru
Editing by Bernadette Baum and Richard Chang)