Broader dollar strength drags Latam FX lower with Mexico leading losses
Markets shut in Brazil for public holiday
Mexican president to offer new proposals to implement judicial overhaul
Both Latam FX and stocks off 0.1%
By Shashwat Chauhan
Nov 20 (Reuters) -Most Latin American currencies slipped on Wednesday, as the dollar regained its post-election momentum, with the Mexican peso on track to snap its best winning streak since early October.
Mexico's peso MXN= led losses early on, down 0.8% against the dollar, set to snap a five-day winning streak, while Chile's peso CLP= was down 0.2%.
Mexican President Claudia Sheinbaum said that her administration will propose to Congress three bills to help implement a sweeping judicial reform that aims to move the country to the direct election of all judges.
Late on Tuesday, Mexico's top economy officials downplayed concerns about trade talks with Donald Trump's administration, saying the potential impact on American companies could give the incoming U.S. president second thoughts about levying massive tariffs.
In Chile, the country's central bank said that tighter external financing conditions could impact the Andean nation's households, businesses and mortgages, increasing default risks.
Colombia's peso COP= also lost 0.4%, while Peru's sol PEN= held firm at 3.794 per dollar.
Most Latin American currencies have declined lately as the dollar remained resurgent globally on expectations the Federal Reserve would slow its pace of monetary easing.
Uncertainty over the impact of U.S. President-elect Donald Trump's policies on immigration, trade and tariffs has pressured Latin American assets, particularly close trading partners like Mexico.
The U.S. could impose nearly 40% tariffs on imports from China early next year, a Reuters poll of economists showed, potentially slicing growth in the world's second-biggest economy by up to 1 percentage point.
Analyst have noted that Trump's plans for lower taxes and higher tariffs are expected to spur inflation and reduce the Fed's scope to further ease interest rates.
Global risk sentiment also took a hit this week after Ukraine used U.S. missiles to strike Russia, with Moscow lowering the threshold for a possible nuclear strike.
However, those jitters have since calmed down after Russian foreign minister Sergei Lavrov downplayed the nuclear threat, which helped restore a sense of calm across markets and left investors to focus on more immediate events. MKTS/GLOB
"Markets seem to be cautiously leaning towards a sanguine view on Ukraine, meaning any further escalations should have a much deeper impact on FX," analysts at ING noted.
MSCI's index for Latin American currencies .MILA00000CUS was down 0.1% as of 10:02 a.m. ET, while a gauge for stocks .MILA00000PUS also edged 0.1% lower.
Argentina's benchmark .MERV took a breather after hitting record highs in the last session, down 0.3%.
Equity markets in Brazil were closed for a public holiday.
HIGHLIGHTS
** Kenya in talks for fresh $750 mln from World Bank, $200 mln from AfDB, says official
** Argentina investors bet on Milei's popularity a year after his election
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1092.62 | -0.21 |
MSCI LatAm .MILA00000PUS | 2081.83 | -0.06 |
Brazil Bovespa .BVSP | - | - |
Mexico IPC .MXX | 50270.02 | 0.09 |
Chile IPSA .SPIPSA | 6583.9 | 0.53 |
Argentina Merval .MERV | 2116895.77 | -0.354 |
Colombia COLCAP .COLCAP | 1372.29 | 0.16 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7726 | -0.06 |
Mexico peso MXN= | 20.2561 | -0.8 |
Chile peso CLP= | 973.38 | -0.19 |
Colombia peso COP= | 4411.58 | -0.36 |
Peru sol PEN= | 3.794 | flat |
Argentina peso (interbank) ARS=RASL | 1002.5 | -0.05 |
Argentina peso (parallel) ARSB= | 1115 | 1.79 |
Reporting by Shashwat Chauhan in Bengaluru; Editing by Toby Chopra
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