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EMERGING MARKETS-Mexico peso slumps on Trump concerns ahead of Fed minutes
January 4, 2017 / 4:20 PM / 8 months ago

EMERGING MARKETS-Mexico peso slumps on Trump concerns ahead of Fed minutes

By Bruno Federowski
    SAO PAULO, Jan 4 (Reuters) - The Mexican peso slumped for a
second straight day on Wednesday, weighed down by uncertainty
over U.S. President-elect Donald Trump's policies ahead of the
release of Federal Reserve policy minutes.
    The peso  weakened 1.2 percent, extending
losses to around 3 percent in two days.
    Concerns that Trump could uphold his promises to curtail
trade and financial flows with Mexico helped drive the peso's
worst yearly performance since 2008 last year.
    The currency accelerated losses on Tuesday after carmaker
Ford Motor Co scrapped a planned Mexican car factory following
criticism by Trump. 
    His pledges of heavy spending and lower taxes also raised
expectations of higher U.S. interest rates, which could drain
capital away from high-yielding emerging markets.
    The Fed will publish later on Wednesday minutes from its
latest policy meeting, offering additional hints on the
possibility of further rate hikes throughout the year.
    Traders also awaited a speech by Mexican President Enrique
Peña Nieto on Wednesday afternoon, when he is expected to
address a double-digit gasoline price increase that triggered
mass protests.
    The Brazilian real strengthened over 1 percent,
extending gains for a second day. Analysts have singled out the
real as one of the emerging market currencies least vulnerable
to the adverse effects of Trump's policies.
    The country's benchmark Bovespa stock index fell 0.8
percent as traders booked profits on blue chips that performed
strongly in the past months, such as state-controlled oil
company Petróleo Brasileiro SA  and miner
Vale SA.
    
    Key Latin American stock indexes and currencies at 1600 GMT:
 Stock indexes                               daily %   YTD %
                                              change  change
                                   Latest             
 MSCI Emerging Markets               871.77     0.38    0.72
 MSCI LatAm                         2366.65    -0.52    1.64
 Brazil Bovespa                    61344.04    -0.76    1.85
 Mexico IPC                        46149.02     0.06    1.11
 Chile IPSA                         4161.11      0.3    0.23
 Chile IGPA                        20779.90     0.28    0.22
 Argentina MerVal                  18113.35     1.12    7.07
 Colombia IGBC                     10191.92      0.3    0.63
 Venezuela IBC                     31839.17     0.34    0.42
                                                            
 Currencies                                  daily %   YTD %
                                              change  change
                                                      
                                     Latest           
 Brazil real                         3.2240     1.14    0.78
 Mexico peso                        21.3780    -1.20   -2.97
 Chile peso                           672.1     0.43   -0.21
 Colombia peso                      2961.93     0.61    1.34
 Peru sol                             3.394     0.03    0.59
 Argentina peso (interbank)         16.0900    -0.90   -1.34
                                                      
 Argentina peso (parallel)            17.08     0.18   -1.52
                                                      
 

 (Reporting by Bruno Federowski; Editing by Meredith Mazzilli)

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