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EMERGING MARKETS-Mexico peso down on Fed, NAFTA jitters; Brazil real tumbles
October 24, 2017 / 2:55 PM / a month ago

EMERGING MARKETS-Mexico peso down on Fed, NAFTA jitters; Brazil real tumbles

    By Bruno Federowski
    SAO PAULO, Oct 24 (Reuters) - Mexico's peso on Tuesday
weakened for a third straight day to a five-month low on
lingering uncertainty over U.S. monetary policy and concerns
about the nation's trade ties with the United States.
    Traders have been wary of emerging market assets in recent
weeks as lack of clarity over who will next head the Federal
Reserve cast doubts over the pace of U.S. interest rate hikes in
coming months.
    Growing bets that current Fed Chair Janet Yellen could be
replaced by a more hawkish policymaker have dampened demand for
high-yielding assets, which could suffer as U.S. interest rates
go up.
    Among Latin American currencies, the Mexican peso has been
under particular stress from talks between the United States,
Canada and Mexico on trade.
    U.S. President Donald Trump's strict demands have fueled
concerns that he could make good on threats to scrap the North
American Free Trade Agreement (NAFTA), dealing a blow to the
highly U.S.-dependent Mexican economy.
    The Mexican peso on Tuesday slipped 0.5 percent.
The Brazilian real fell 1 percent, leading losses in the
region, hammered by concerns of fading lawmaker support for
President Michel Temer's platform of structural reforms.
    The lower house of Congress is set to vote on Wednesday
whether to put Brazil's unpopular center-right president on
trial for corruption charges. Traders widely expect him to dodge
the accusations, as he did with a first set of charges earlier
this year, but a smaller show of support could hurt his reform
efforts.
    "If less lawmakers vote to clear Temer, markets will tense
up. Not even a watered down version of his pension reform plans
would pass Congress in such an unfavorable environment,"
Advanced brokerage trader Alessandro Faganello said.
    Brazilian stocks, however, rose 0.4 percent as
shares of wood pulpmaker Fibria SA jumped. Fibria
posted net income of 743 million reais ($229 million) in the
third quarter, up from 32 million reais a year ago, and forecast
a tighter pulp market in the second half of the year.

    
    Key Latin American stock indexes and currencies at 1430 GMT:
 Stock indexes                                daily %   YTD %
                                               change  change
                                   Latest              
 MSCI Emerging Markets              1112.59      -0.3   29.41
 MSCI LatAm                         2863.05     -0.96   23.51
 Brazil Bovespa                    75626.94      0.28   25.57
 Mexico S&P/BVM IPC                49774.01      0.46    9.05
 Chile IPSA                         5523.73     -0.65   33.06
 Chile IGPA                        27690.32     -0.57   33.55
 Argentina MerVal                  27880.28      0.35   64.80
 Colombia IGBC                     10899.78      0.19    7.62
 Venezuela IBC                       628.39      2.55  -98.02
                                                             
 Currencies                                   daily %   YTD %
                                               change  change
                                                       
                                     Latest            
 Brazil real                         3.2626     -0.98   -0.41
 Mexico peso                        19.1855     -0.53    8.12
 Chile peso                           631.8      0.19    6.16
 Colombia peso                      2972.32     -0.70    0.98
 Peru sol                             3.242     -0.09    5.31
 Argentina peso (interbank)         17.4800     -0.37   -9.18
                                                       
 Argentina peso (parallel)            18.02     -0.06   -6.66
                                                       
 
 (Reporting by Bruno Federowski; Editing by Meredith Mazzilli)
  

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