Mexico's peso runs into turbulence after Trump vows import tariffs
Brazil's fiscal package to come out this week, finance minister says
Mexican President Sheinbaum urges dialogue with Trump over tariff plans
Both Latam FX stocks down 0.1%
By Shashwat Chauhan
Nov 26 (Reuters) -Mexico's peso led losses in Latin America on Tuesday as the currency came under pressure after U.S. President-elect Donald Trump pledged tariffs on all imports from the region's second-biggest economy.
Trump, who takes office on Jan. 20, said he would impose a 25% tariff on imports from Canada and Mexico until they clamped down on drugs and migrants crossing the border in a move that would appear to violate a free-trade deal.
"FX is the pressure valve through which global markets are responding to the announcement by president-elect Trump," analysts at Societe Generale said.
"The CAD and MXN logically are roiled by the announcement given the dominance of exports to the U.S."
The peso MXN= dropped 1.5% to 20.592 per greenback, clawing back some losses after falling as much as 2.3% during the session.
Mexican President Claudia Sheinbaum said she would send a letter to Trump, urging dialogue and cooperation.
Minutes from the Mexican central bank's last policy meeting, where it had cut interests rates by 25-basis-points, are scheduled to be released on Thursday.
Trump separately outlined "an additional 10% tariff, above any additional tariffs" on imports from China, sending the Chinese yuan CNH= down 0.2% in offshore trading.
Brazil's real BRL=, in the meantime, held firm at 5.8012 per dollar in choppy trading.
Late on Monday, Brazilian Finance Minister Fernando Haddad said a fiscal package with spending cut measures was finalized in a meeting with President Luiz Inacio Lula da Silva, adding the government will be ready to announce the details this week.
Data from statistics agency IBGE showed Brazil's consumer prices rose more than expected in the month to mid-November, further fueling bets that the central bank will keep hiking interest rates.
Latin American assets have run into turbulence in November, with currencies of Mexico and Brazil amongst the worst performers in emerging markets, as investors mull the implications of Trump's policies on trade, tariffs and immigration.
Continued repricing of the Federal Reserve's interest rate path has also helped the dollar globally, weakening EM currencies.
Minutes from the Fed's most recent policy meeting, where it opted to cut interest rates by 25 basis points, are due to be released later in the day.
MSCI's index for Latin American currencies .MILA00000CUS shed 0.1% as of 10:01 a.m. ET, while a gauge for stocks .MILA00000PUS also fell 0.1%.
Latin American stock estimates for 2025 have been cut due to increasing uncertainty about Mexico's outlook and Brazil's public finances, amid concerns of a possible correction in the near-term, a Reuters poll found.
Elsewhere in emerging markets, Nigeria's central bank raised its benchmark lending rate by 25 basis points to 27.50%, citing renewed inflationary pressures in Africa's most populous nation.
Pakistan's dollar-denominated sovereign debt came under pressure as deadly clashes between protesters and security forces intensified.
The longer-dated maturities fell the most, with the 2051 shedding just over 1 cent to be bid at 77.9 cents on the dollar, Tradeweb data showed.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1087.99 | -0.39 |
MSCI LatAm .MILA00000PUS | 2082.59 | -0.09 |
Brazil Bovespa .BVSP | 129622.77 | 0.45 |
Mexico IPC .MXX | 50028.42 | -0.36 |
Chile IPSA .SPIPSA | 6553.22 | 0.06 |
Argentina Merval .MERV | 2195606.71 | -1.034 |
Colombia COLCAP .COLCAP | 1398.09 | -0.03 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.8012 | -0.05 |
Mexico peso MXN= | 20.592 | -1.54 |
Chile peso CLP= | 974.4 | 0.11 |
Colombia peso COP= | 4404.89 | -0.63 |
Peru sol PEN= | 3.774 | -0.03 |
Argentina peso (interbank) ARS=RASL | 1006.5 | 0.05 |
Argentina peso (parallel) ARSB= | 1110 | 1.80 |
Reporting by Shashwat Chauhan in Bengaluru; Editing by Angus MacSwan
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