Mexican peso steers Latam FX lower after judicial reforms clear first hurdle
Refiling to fix typographical error in advisory line. Updated at 10:32 a.m. ET/ 1432 GMT
Mexican judicial overhaul passes first hurdle in committee vote
Brazil's Vale rises after Gustavo Pimenta named next CEO
Latam stocks, FX down 0.3% each
By Shashwat Chauhan
Aug 27 (Reuters) -The Mexican peso slid more than 1% on Tuesday after lawmakers in the country's lower house of Congress approved in general terms a controversial judicial reform, while other Latin American currencies were subdued as investors remained largely risk-off.
Mexico's currency MXN= depreciated 1.2%, hitting a more than three-week low, after lawmakers approved in a committee vote a controversial judicial reform late on Monday, paving the way for a final debate when the newly elected Congress begins its term next month.
The proposed reform, proposed in February by outgoing President Andres Manuel Lopez Obrador, calls for the popular election of over 7,000 judges and magistrates, including Supreme Court justices.
Brazil's real BRL= swung between gains and losses after data showed consumer price inflation slowed this month, adding to uncertainty about the central bank's interest rate decision next month after it recently adopted a more hawkish and data-dependent policy stance.
"This situation is a worry for COPOM, likely influencing its decision to maintain interest rates at the current level at upcoming meetings," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.
"We nevertheless expect policymakers to resume interest rate cuts in late Q4 despite these challenges, assuming domestic and external uncertainties diminish."
Colombia's peso COP= slipped 0.4% as prices of crude oil, one of the country's top exports, fell after spiking on Monday. O/R
Most Latin American currencies saw sharp gains at the end of last week when Federal Reserve Chair Jerome Powell said on Friday "the time has come" to lower interest rates, pushing the dollar to its lowest level so far this year.
However, emerging market assets, generally considered as risky, paused as investors measured the risks of escalating geopolitical worries in the Middle East.
Hezbollah had launched hundreds of rockets and drones at Israel early on Sunday, and Israel's military said it struck Lebanon with around 100 jets to thwart a larger attack, in one of the biggest clashes in more than 10 months of border warfare.
MSCI's indexes for Latin American currencies .MILA00000CUS stocks .MILA00000PUS dipped 0.3 % each.
Brazil's Bovespa stock index .BVSP was muted. Shares of Vale VALE3.SA gained 2.7% after the miner said that current Chief Financial Officer Gustavo Pimenta will become its next Chief Executive Officer, wrapping up a noisy succession process that had seen board members depart amid accusations of political intrigue.
Elsewhere in emerging markets, Hungary's forint EURHUF=, HUF= appreciated both against the euro and the dollar after the European nation's central bank paused its rate-cutting cycle after 15 consecutive cuts totaling 1,125 basis points.
HIGHLIGHTS
** Pakistan eyes $4 bln from Middle East banks to plug financing gap, says central bank chief as per a Reuters report
** Mexico central bank has growing inflation challenge: extortion
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1100.68 | -0.33 |
MSCI LatAm .MILA00000PUS | 2292.98 | -0.27 |
Brazil Bovespa .BVSP | 136923.69 | 0.03 |
Mexico IPC .MXX | 53347.27 | 0.33 |
Chile IPSA .SPIPSA | 6415.47 | -0.41 |
Argentina Merval .MERV | 1605143.21 | 0.762 |
Colombia COLCAP .COLCAP | 1344.64 | 0.05 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.4893 | 0.1 |
Mexico peso MXN= | 19.6176 | -1.15 |
Chile peso CLP= | 905.98 | -0.07 |
Colombia peso COP= | 4039.54 | -0.4 |
Peru sol PEN= | 3.7473 | -0.49 |
Argentina peso (interbank) ARS=RASL | 948.5 | 0.158144439 |
Argentina peso (parallel) ARSB= | 1330 | 1.503759398 |
Reporting by Shashwat Chauhan in Bengaluru; editing by Jonathan Oatis
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