Mexican peso hits 2022 lows, Latam FX mixed ahead of US election outcome
Brazil continues talks on spending control measures
Chile only considered 25-bps rate cut in Oct, minutes show
Brazil's Itau Unibanco jumps after bumping up credit outlook
MSCI Latam FX index up 0.1%, stocks index down 0.1%
Updated at 3:00 p.m. ET
By Johann M Cherian and Ankika Biswas
Nov 5 (Reuters) -The Mexican peso touched its lowest level since late 2022 in a mixed trade for Latin American currencies on Tuesday, as traders braced for a nail-biting U.S. presidential election outcome that could set the tone for foreign flows into the region.
Mexico's peso MXN=, which is expected to be the most sensitive to the election results, depreciated 0.4%, briefly touching its September 2022 lows and last trading at the 20-to-the-dollar mark.
The currency, along with the Brazilian real BRL=, has been one of the hardest hit in the region, down over 15% so far this year.
"Mexico faces the biggest risks... It's a manufacturing-heavy economy with a deep reliance on the U.S. as an export market. This makes the threat of a global tariff much more disruptive," said Joaquin Kritz Lara, chief economist at Numera Analytics.
On top of concerns around judicial reforms after President Claudia Sheinbaum's Morena party secured large majorities in Congress following June's election, possibility of a second Donald Trump term has further unnerved investors as he seeks to slap a new round of tariffs on Mexican exports.
Analysts expect a likely Trump victory to quickly weaken the peso to more than 21 per U.S. dollar.
Earlier in the day, overnight volatility on the peso MXNONO= had soared to touch its highest since the day of the 2016 vote on Nov. 8.
However, Trump is still neck and neck with Vice President Kamala Harris in opinionpolls, and the winner might not be known for days after voting ends.
Analysts also view Trump's domestic tax policies as more inflationary than Harris', which could lift the greenback and U.S. Treasury yields and consequently diminish foreign inflows into emerging markets broadly.
Meanwhile, Brazil's real climbed 0.7% against the greenback to hit a one-week high, helping the MSCI Latam currencies index .MILA00000CUS erase early losses and trade 0.1% higher.
The country's local government continued high-level discussions towards the announcement of anticipated spending control measures, though it has not disclosed when they will be unveiled.
Investors had sold off the currency despite rate hikes by the local central bank on expectations that the region's largest economy might not meet its fiscal targets for the year.
If fiscal talks prove successful, the Numera Analytics economist sees a strong likelihood of larger gains in the real as speculators could adopt long positions on the currency.
Investors also awaited interest-rate decisions out of Brazil, due on Wednesday, and Peru on Thursday.
Chile's peso CLP= pared some of the day's losses and was last down only 0.1%.
Minutes from the country's October monetary policy decision showed the central bank's only plausible option was lowering the benchmark interest rate by 25 basis points.
However, Chile's main stocks index .SPIPSA was the worst hit among its regional peers, down 1.6% to hit a three-week low.
Colombia's peso COP= climbed 0.2% against the dollar amid steady oil prices, while the Peruvian sol PEN= slipped 0.2%.
Among single stocks, Brazil's Itau Unibanco ITUB4.SA climbed 3.5% after the Latin America's largest private lender bumped up its estimated annual portfolio growth.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1139.93 | 0.89 |
MSCI LatAm .MILA00000PUS | 2129.48 | -0.08 |
Brazil Bovespa .BVSP | 130577.24 | 0.05 |
Mexico IPC .MXX | 50712.31 | -0.33 |
Chile IPSA .SPIPSA | 6524.21 | -1.6 |
Argentina Merval .MERV | 1906534.23 | -0.653 |
Colombia COLCAP .COLCAP | 1356.31 | 0.26 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7523 | 0.68 |
Mexico peso MXN= | 20.1805 | -0.45 |
Chile peso CLP= | 955.4 | -0.13 |
Colombia peso COP= | 4406.78 | 0.16 |
Peru sol PEN= | 3.772 | -0.19 |
Argentina peso (interbank) ARS=RASL | 992.5 | 0.05 |
Argentina peso (parallel) ARSB= | 1115 | 4.93 |
Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Alistair Bell
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