Mexican peso, stocks slip as Trump clinches US presidency
Brazil c.bank decision due at 2130 GMT
Argentina debt risk index drops after Trump win
MSCI Latam stocks index up 0.2%, FX also climbs
Updates prices throughout
By Johann M Cherian
Nov 6 (Reuters) -Currencies and stocks across most major Latin American economies edged higher in choppy trade onWednesday, though Mexico's peso and the main stock index stayed under pressure afterDonald Trump's victory in the U.S. presidential election.
MSCI's index tracking currencies in the region .MILA00000CUS rose 0.9%, after touchinga three-month low in the session against abroadly stronger dollar. An index tracking Latam bourses .MILA00000PUS edged up 0.2%, reversing early declines ofabout1.9%.
Mexico's peso MXN= depreciated 0.8% to 20.25 per dollar, after reaching 20.81, its weakest in morethan 27 months. Thelocal IPC equitiesindex .MXX dipped 0.3%, also coming off one-year lows touched earlier.
Brokerage Citigroup said it has added a short position on the peso versus the South African rand after the U.S. elections. The currency had slid over 3% earlier in the day.
The currency is the worst performer among peers, losing about 21% from its April highs as markets sold off the peso in anticipation of a Trump presidency along with controversial domestic judicial reforms.
Trump's campaign rhetoric included 200% tariffs on auto exports from Mexico, mass deportations and U.S. military action against drug cartels.
When asked if Trump's proposed tariffs on Mexico could derail the recent 'near shoring' trend in Mexico, Jakob Ekholdt Christensen, senior EM strategist at BankInvest said, "What Trump wants to do is more on-shoring into the U.S. economy."
"But, there will be some reflection that it may not be possible to shift it all to the U.S. and therefore the trade relations with Mexico should be still promoted, but clearly companies will be forced to think twice about whether to locate production in Mexico or in the U.S."
Brazil's real BRL= edged 0.7% higher. Analysts expect the country to enjoy moretrade with China given that Beijing replaced all its U.S. soybean imports with Brazilian ones when trade tensions flared during Trump's first presidency.
Separately, the country's finance minister said the government has concluded talks on new measures tostrengthen the fiscal framework, seen as crucial to improve the valuation of the country's risk assets.
The local Bovespa index .BVSP slid 0.6%ahead of a central bank interest rate decision, with economists projecting a 50 basis points rate hike.
In Argentina, the yield on hard-currency bonds maturing in 2029 AR220024407= slipped to 17.78%, aiding the local MerVal index's .MERV 3.6% surge.
A risk index 11EMJ which measuresthe premium investors demand to hold local bonds versus equivalent U.S. debt dropped to its lowest level in five years. The country's libertarian President Javier Milei is seen as a political ally of Trump.
Currencies of copper producers Chile CLP= and Peru PEN= lost 0.7% and 0.1%, respectively, tracking weak prices of the red metal on prospects that major electrification initiatives could be rolled back and consequently dampen demand.
Key Latin American stock indexes and currencies:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1129.77 | -0.82 |
MSCI LatAm .MILA00000PUS | 2126.22 | 0.21 |
Brazil Bovespa .BVSP | 129845.86 | -0.62 |
Mexico IPC .MXX | 50659.15 | -0.34 |
Chile IPSA .SPIPSA | 6519.78 | -0.07 |
Argentina MerVal .MERV | 2002302.81 | 3.677 |
Colombia COLCAP .COLCAP | 1357.97 | -0.12 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.7095 | 0.65 |
Mexico peso MXN=D2 | 20.2500 | -0.76 |
Chile peso CLP=CL | 962 | -0.74 |
Colombia peso COP= | 4413.49 | -0.23 |
Peru sol PEN=PE | 3.777 | -0.13 |
Argentina peso (interbank) ARS=RASL | 992.5000 | 0.05 |
Emerging currencies stumble over Trump win https://reut.rs/40zyyiE
Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Graphic by Sumanta Sen; Editing by Richard Chang
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