June 28, 2018 / 8:56 PM / 6 months ago

EMERGING MARKETS-Mexico peso surges, Brazil real rebounds from rout

 (Recasts with peso gains, updates prices)
    By Miguel Gutierrez
    MEXICO CITY, June 28 (Reuters) - Mexico's peso surged on
Thursday by the most in more than a year ahead of a presidential
election this weekend in which a leftist front-runner is seen
winning, while Brazil's real bounced back from steep losses.
    The peso gained more than 2 percent against
the dollar, leading major currencies. A final battery of polls
this week showed Andres Manuel Lopez Obrador held a wide lead
ahead of Sunday's vote.
    The peso has clawed back from a 1-1/2 year low it hit in the
middle of the month. Traders and analysts said the peso had
priced in a victory by Lopez Obrador, who again insisted at a
closing rally Wednesday he would not raise government debt.
    However, the peso could weaken if Lopez Obrador's party
gains majorities in both houses of Congress, which could allow
for more significant changes to economic policy, a traders and
analysts said.
    Also supporting the peso, Mexico's central bank deputy
governor Javier Guzman suggested at a conference in London that
policymakers could hike interest rates again, if needed,
according to a presentation published Thursday. 
    "(Guzman) considers that there's a palpable risk in
inflationary pressures, which elevates the probability of
another interest rate increase and at the same time reduces
speculation against the peso," Banco Base said in a report.
    Brazil's real gained about 0.5 percent after a rout
on Wednesday, while a key poll showed Brazil's left failing to
gain steam in presidential elections scheduled for October.
    On Wednesday, the real led losses across the region, falling
over 2 percent. A decision by a Supreme Court Justice that all
privatizations in Brazil must be approved by Congress also hit
the currency.
    The poll conducted by industry group Ibope showed far-right
congressman Jair Bolsonaro leading with 17 percent support,
followed by environmentalist Marina Silva. Center-left populist
Ciro Gomes registered 8 percent support.
    Across the region, equities markets were mixed with Brazil's
benchmark Bovespa index the big winner, climbing 1.6
percent.
    Separately, Mexican breadmaker Bimbo said on Thursday it had
completed the acquisition of Chinese breadmaker Mankattan, a
deal originally announced in February.
    Key Latin American stock indexes and currencies at 2012 GMT:
    
    
 Stock indexes                            daily %   YTD %
                                           change  change
                              Latest               
 MSCI Emerging Markets          1047.62     -0.43   -9.18
                                                   
 MSCI LatAm                     2437.07      0.99  -14.67
                                                   
 Brazil Bovespa                71762.59      1.63   -6.07
                                                   
 Mexico IPC                    47028.47      0.33   -4.71
                                                   
 Chile IPSA                     5256.46     -0.38   -5.54
                                                   
 Chile IGPA                    26642.98     -0.57   -4.78
                                                   
 Argentina MerVal              26836.67      3.53  -10.74
                                                   
 Colombia IGBC                 12346.84      0.79    8.59
                                                   
 Venezuela IBC                 86006.95      2.63  6708.9
                                                        8
                                                         
 Currencies                               daily %   YTD %
                                           change  change
                                 Latest            
 Brazil real                     3.8547      0.50  -14.05
                                                   
 Mexico peso                    19.7380      2.20   -0.20
                                                   
 Chile peso                       649.1     -0.55   -5.31
                                                   
 Colombia peso                   2949.5     -0.17    1.10
 Peru sol                         3.276     -0.09   -1.19
                                                   
 Argentina peso (interbank)     28.0000     -2.00  -33.57
                                                   
 Argentina peso (parallel)         28.1     -0.53  -31.57
                                                   
 
 (Reporting by Miguel Gutierrez in Mexico City and Gram Slattery
in Sao Paulo; editing by Diane Craft)
  
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