December 22, 2017 / 5:52 PM / in a year

EMERGING MARKETS-Mexico peso hits 9-month low on corruption scandal, U.S. tax plan

    By Bruno Federowski and Miguel Gutierrez
    BRASILIA, Dec 22 (Reuters) - The Mexican peso hit a
nine-month low on Friday, battered by a U.S. tax overhaul and
domestic corruption scandals that boost a leftist front-runner's
chances in next year's elections.
    U.S. President Donald Trump signed sweeping tax legislation
into law on Friday, slashing the U.S. corporate rate to 21
percent from 35 percent beginning on Jan. 1.
    The bill has prompted worries in Mexico that the country
could lose out on investment to its northern neighbor. Concerns
that it may foster inflation and force the Federal Reserve to
hike interest rates have also weighed on demand for emerging
market currencies.
    The Mexican peso weakened 0.8 percent, leading
losses among Latin American currencies.
    Concerns that corruption scandals could boost the candidacy
of presidential candidate Andres Manuel Lopez Obrador, whose
nationalist pledges could stir tensions with Trump's
administration, added to pressure.
    On Wednesday, authorities arrested a former high-ranking
official of the PRI, the latest in a string of damaging
allegations to batter Mexico's centrist ruling party.
    Trading volumes were thin across the region as investors
avoided making big bets ahead of the Christmas holiday. The
Chilean peso slipped 0.4 percent, while the Brazilian
real fell 0.6 percent.
    Brazil's benchmark Bovespa stock index was nearly
flat, but shares of planemaker Embraer SA jumped for
a second day in strong volumes.
    Reports that Embraer had held talks with Boeing Co
over a potential tie-up lifted the stock by 22 percent on
    Brazilian President Michel Temer said on Friday that he
opposed Boeing taking control of Embraer but would welcome an
injection of foreign capital into the regional planemaker.

    Key Latin American stock indexes and currencies at 1730 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
 MSCI Emerging Markets               1140.91     0.58    31.56
 MSCI LatAm                          2777.73    -0.46    19.22
 Brazil Bovespa                     75153.82     0.03    24.78
 Mexico S&P/BVM IPC                 48515.87     0.03     6.29
 Chile IPSA                          5537.60     1.59    33.39
 Chile IGPA                         27851.01     1.44    34.32
 Argentina MerVal                   28952.36     1.66    71.13
 Colombia IGBC                      11222.24     0.05    10.80
 Venezuela IBC                       1258.20    -1.73   -96.03
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.3277    -0.58    -2.36
 Mexico peso                         19.6325    -0.79     5.66
 Chile peso                            622.8    -0.37     7.69
 Colombia peso                       2957.88     0.18     1.47
 Peru sol                              3.234     1.02     5.57
 Argentina peso (interbank)          18.0000    -0.28   -11.81
 Argentina peso (parallel)             18.19    -0.55    -7.53
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
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