* China’s Hong Kong security law compounds trade worries
* Dollar strengthens as safe-haven demand rises
* Argentina extends debt talks deadline as default looms

(Adds comments, updates prices)
By Shreyashi Sanyal
May 22 (Reuters) – Most Latin American currencies weakened
on Friday as demand for the safe-haven dollar rose after China’s
plan to impose a new national security law on Hong Kong became
the latest front in intensifying tensions between Beijing and
The U.S. dollar rose for a second day, while Brazil’s real
slipped 0.2%. Declining oil prices pressured crude
exporter Colombia’s peso, while Chile’s currency
dipped as prices of its main export, copper, slid.
“As ‘trade conflict’ also means ‘USD strength’, the risk-on
related USD weakness seen over the past days comes to a
(preliminary) end,” said Ulrich Leuchtmann, head of FX and
commodity research at Commerzbank.
Regional stocks were also lower, with Brazil shares
retreating from near three-week highs.
Latin American assets have now been hit with a double
whammy, with most South American economies reeling under
pressure from coronavirus-fueled shutdowns and more recently, a
resurgence in U.S.-China trade tensions.
“Our working assumption is that lockdowns will eventually be
lifted as the virus comes under control. Even so, the fact that
they will remain in place for longer in most emerging markets
will make the region’s (Latin America) recovery slower,”
economists at Capital Economics wrote in a note.
Brazil suffered a record of 1,188 daily coronavirus deaths
on Thursday and is fast approaching Russia to become the world’s
No. 2 COVID-19 hot spot behind the United States, as it
struggles to tackle the health and economic crisis in the face
of rising political worries.
Mexico’s main index rose 0.6% with eyes on
developments regarding the new rules in the energy sector.

Meanwhile, data showed inflation in the country accelerated
faster that expected in the first half of May, but the annual
rate still remained below the central bank’s target rate.

Citigroup analysts say the rates market will likely look
beyond Mexico’s inflation number given that food price
increases are likely seen as transitory by the central bank.
In Argentina, the government is planning to amend its offer
to creditors to restructure $65 billion in foreign debt, with
talks on a positive course, Economy Minister Martin Guzman told
On Thursday, the government extended a deadline for talks
with creditors to restructure around $65 billion in foreign debt
to June 2, as the two sides edge closer to a deal needed to
avert a messy default that would drag the country deeper into

Key Latin American stock indexes and currencies at 1956 GMT:

Stock indexes Latest Daily % change
MSCI Emerging Markets 904.53 -2.74

MSCI LatAm 1669.44 -0.4

Brazil Bovespa 82031.58 -1.2
Mexico IPC 35779.27 0.61
Chile IPSA 3733.83 -0.57

Argentina MerVal 40771.22 -1.491

Colombia COLCAP 1061.78 -0.41

Currencies Latest Daily % change
Brazil real 5.5726 -0.15

Mexico peso 22.7629 0.45

Chile peso 805.5 -0.35

Colombia peso 3774.64 -0.39
Peru sol 3.429 -0.53

Argentina peso (interbank) 68.1700 -0.12

(Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru;
Editing by Andrea Ricci)