Mexican peso choppy, Argentine stocks hit record high after Trump win
Brazil central bank decision due at 2130 GMT
Mexican peso hit two-year low in early trade
Argentina debt risk index drops after Trump win
MSCI Latam stocks index up 1.5%, FX climbs nearly 2%
Updated at 3:30 p.m. ET
By Ankika Biswas and Johann M Cherian
Nov 6 (Reuters) -Mexico's peso turned volatile after an early slide on Wednesday, with the Brazilian real jumping 1% and bucking the weak trend across Latin American currencies as investors assessed Donald Trump's victory in the U.S. presidential election.
The Mexican peso MXN=, perceived as most sensitive to a Trump win, had slumped over 3% against the dollar to its lowest level since August 2022, before turning positive and once again slipping back into the red. It was last down 0.4% at around 20 to the dollar.
Even the country's stocks shrugged off the initial sell-off, with the main stock index .MXX last up over 1%. Argentina's benchmark stock index .MERV hit a record high, up nearly 3%.
"We do need to recognize the peso has been among the worst-performing EM (emerging market) currency this year. In other words, a lot of the Trump rhetoric, around Mexican trade and immigration, in addition to domestic challenges, was already priced in," said Alejo Czerwonko, chief investment officer for emerging markets in the Americas at UBS Global Wealth Management.
While 200% tariffs on cars coming from Mexico and mass deportations are some key concerns, analysts said Mexico has some leverage, particularly on migration, that could help dilute some of Trump's pledges in trade and security.
The currency, which is down 15% this year, was predicted to fall to 21 per dollar in a second Trump term.
"MXN is backed also by the fact that overnight volatility faded. It did not translate into multiple days and nights or potentially weeks of uncertainty. It seems markets are content that this contest isn't dragging longer than necessary," said Juan Perez, director of trading at Monex.
Citigroup added a short position on the peso versus the South African rand ZAR= after the U.S. elections.
However, with Brazil's real BRL= hitting a two-week high, the MSCI index tracking Latam currencies .MILA00000CUS reversed early losses to jump nearly 2%.
Gains in the real were supported by Brazil's finance minister saying the government has concluded talks on new measures to strengthen the fiscal framework, seen as crucial to improving the valuation of the country's risk assets.
Brazil's interest-rate decision is due later in the day.
Despite local rate hikes, the real is down over 14% in 2024 on concerns that the largest Latam economy might not meet its annual fiscal targets.
Meanwhile, top copper producers Chile's peso CLP= was the worst hit among its regional peers, down 0.6% to April lows, and Peru's sol PEN= slipped 0.1% tracking a tumble in prices of the red metal.
Peru's monetary policy decision is due on Thursday.
A strong dollar, which was up 1.6% after hitting a four-month intraday high, also weighed on Latam currencies.
Argentina's dollar bonds had also jumped in early trade and risk index 11EMJ dropped sharply, with investors cheering the prospect of closer ties between libertarian President Javier Milei and Trump.
The MSCI index tracking Latam stocks .MILA00000PUS was also up 1.5%, hitting an over one-week high.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1131.27 | -0.69 |
MSCI LatAm .MILA00000PUS | 2154.42 | 1.54 |
Brazil Bovespa .BVSP | 130377.42 | -0.22 |
Mexico IPC .MXX | 51379.84 | 1.08 |
Chile IPSA .SPIPSA | 6579.55 | 0.85 |
Argentina Merval .MERV | 1982811.62 | 2.668 |
Colombia COLCAP .COLCAP | 1361.48 | 0.13 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.6808 | 1.22 |
Mexico peso MXN= | 20.181 | -0.42 |
Chile peso CLP= | 960.33 | -0.57 |
Colombia peso COP= | 4409.48 | -0.14 |
Peru sol PEN= | 3.776 | -0.11 |
Argentina peso (interbank) ARS=RASL | 992.5 | 0.05 |
Argentina peso (parallel) ARSB= | 1115 | 4.93 |
Emerging currencies stumble over Trump win https://reut.rs/40zyyiE
Reporting by Johann M Cherian, Sruthi Shankar and Ankika Biswas in Bengaluru; Graphic by Sumanta Sen; Editing by Richard Chang and Lisa Shumaker
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