August 28, 2017 / 5:31 PM / a year ago

EMERGING MARKETS-Mexico peso tumbles as Trump renews NAFTA threats

    By Bruno Federowski
    SAO PAULO, Aug 28 (Reuters) - The Mexican peso tumbled on
Monday after U.S. President Donald Trump renewed his threat to
scrap NAFTA, reigniting concerns of a damaging trade war.
    In a tweet days before Mexico, the United States and Canada
were set to hold a second round of negotiations on the treaty,
Trump said talks were "very difficult" and that he may have to
terminate the trade deal.
    The tweet echoed similar remarks a week ago that drove a
sharp selloff in the peso. The currency later pared some of
those losses after Mexican and Canadian officials dismissed the
threats as a negotiation tactic.
    On Monday, the peso slipped 1.1 percent to a one-week low.
The country's benchmark stock index fell 0.5 percent.
    "A deal remains our base case but the peso may lag with
higher uncertainty, after a period where Trump fear has been
almost fully priced out by the markets," Citigroup strategists
wrote in a client note.
    The Chilean peso strengthened 1 percent after
breaching the 630 per greenback threshold for the first time in
two years, tracking widespread dollar weakness.
    Emerging market currencies have advanced since Friday after
Federal Reserve Chair Janet Yellen refrained from discussing
monetary policy in a closely watched speech, moderating
expectations the U.S. central bank will raise interest rates
further this year.
    The dollar also weakened after Tropical Storm Harvey
paralyzed Houston, Texas, the nation's fourth-biggest city,
spurring worries about the storm's potential impact on the U.S.
    Brazil's stocks and currency were nearly flat as traders
awaited key votes in Congress, including a bill setting a wider
budget deficit target for this year. 
    Shares of JBS SA were the biggest gainers,
extending advances for a second trading day after an
anti-corruption division within the Brazilian prosecutor
general's office approved a leniency deal with J&F Investimentos
SA, the holding company that controls the world's largest
    Key Latin American stock indexes and currencies at 1720 GMT:
 Stock indexes                    Latest        Daily  YTD pct
                                                  pct   change
 MSCI Emerging Markets              1,085.52     0.01    25.87
 MSCI LatAm                         2,875.00    -0.63    23.61
 Brazil Bovespa                    71,101.06     0.04    18.05
 Mexico S&P/BVM IPC                51,092.01    -0.55    11.94
 Chile IPSA                         5,154.31    -0.42    24.16
 Chile IGPA                        25,740.56    -0.39    24.15
 Argentina MerVal                  23,501.68        0    38.92
 Colombia IGBC                     10,845.93    -0.47     7.09
 Venezuela IBC                    206,677.84     1.77   551.87
 Currencies                           Latest    Daily  YTD pct
                                                  pct   change
 Brazil real                          3.1556    -0.07     2.97
 Mexico peso                         17.8155    -1.07    16.44
 Chile peso                           627.65     1.04     6.86
 Colombia peso                      2,942.17    -0.66     2.02
 Peru sol                              3.235     0.03     5.53
 Argentina peso (interbank)          17.2250    -0.03    -7.84
 Argentina peso (parallel)             18.26     0.11    -7.89
 (Reporting by Bruno Federowski; Editing by Meredith Mazzilli)
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