December 22, 2017 / 10:59 PM / 9 months ago

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

 (Updates prices)
    By Bruno Federowski and Miguel Gutierrez
    BRASILIA/MEXICO CITY, 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 1.37 percent, leading
losses among Latin American currencies at 19.75 units per
dollar.
    "I don't think 20 pesos (per dollar) will be difficult to
reach before the end of the year, but it will probably happen in
the first quarter, above all with the next round of talks to
renegotiate the North American Free Trade Agreement," Banco Base
analyst Gabriela Siller said.
    Concerns that corruption scandals could boost 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 big bets ahead of Christmas. The Chilean peso
slipped 0.37 percent, while the Brazilian real fell 0.14
percent.
    Brazil's benchmark Bovespa stock index stayed nearly
flat, with shares of planemaker Embraer SA falling
1.4 percent. The company's shares had risen 22 percent the day
before, after Embraer said it was in talks with Boeing Co
over a potential tie-up.
    Brazilian President Michel Temer said on Friday that he
opposed Boeing taking control of Embraer, though he would
welcome an injection of foreign capital into the regional
planemaker.
    
    Key Latin American stock indexes and currencies at 2123 GMT:
 Stock indexes                                 daily %    YTD %
                                Latest          change   change
 MSCI Emerging Markets              1141.09       0.59    32.34
                                                        
 MSCI LatAm                         2780.93      -0.35    18.81
                                                        
 Brazil Bovespa                    75186.53       0.07    24.84
 Mexico IPC                        48387.93      -0.24     6.01
 Chile IPSA                         5537.60       1.59    33.39
                                                        
 Chile IGPA                        27851.01       1.44    34.32
 Argentina MerVal                  28931.54       1.58    71.01
                                                        
 Colombia IGBC                     11249.98       0.29    11.08
                                                        
 Venezuela IBC                      1258.20      -1.73   -96.03
                                                               
 Currencies                                    daily %    YTD %
                                                change   change
                                     Latest             
 Brazil real                         3.3369      -0.14    -2.63
                                                        
 Mexico peso                        19.7480      -1.37     5.04
                                                        
 Chile peso                           622.8      -0.37     7.69
                                                        
 Colombia peso                         2957       0.21     1.50
 Peru sol                             3.235       0.99     5.53
                                                        
 Argentina peso (interbank)         18.0650      -0.64   -12.12
                                                        
 Argentina peso (parallel)            18.25      -0.88    -7.84
                                                        
 
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn and
Lisa Shumaker)
  
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