October 16, 2017 / 3:37 PM / a year ago

EMERGING MARKETS-Mexico peso slips to 5-month low on NAFTA jitters

    By Bruno Federowski
    SAO PAULO, Oct 16 (Reuters) - The Mexican peso weakened to a
five-month low on Monday on mounting concerns over the future of
the nation's trade ties with the United States.
    U.S. President Donald Trump's administration, which is
demanding big changes to the North American Free Trade
Agreement, has presented a series of hard-line proposals that
partners Canada and Mexico say will be tough to accept.
    Negotiators are running out of time to reach consensus and
look set to extend the remaining rounds in a bid to meet a
year-end deadline, three people told Reuters.
    Concerns over the future of NAFTA have hit the Mexican
currency hard. The United States purchases more than
three-quarters of Mexico's exports.
    Bank of America Merrill Lynch strategists said they were
bearish on the Mexican currency, while they saw room
for the Brazilian real to appreciate.
    "We do not expect the NAFTA renegotiations to be smooth. We
expect investment to decrease while volatility could pick up,"
they wrote in a report. "The high level of rates will start to
play against economic growth. Positioning remains heavy in
    The peso slipped 1 percent on Monday, while the Brazilian
real was down 0.6 percent.
    Demand for the Brazilian currency fluctuated as traders
feared that lawmakers, in a vote later this week, would put
President Michel Temer on trial before the Supreme Court on
corruption charges. Investors see Temer's platform of structural
reforms as key to boosting long-term economic growth.
    Brazil's benchmark Bovespa stock index fell 0.4
percent, weighed down by shares of Itaú Unibanco Holding SA
, the nation's largest lender.
    A unit of Brazil's antitrust regulator, Cade, on Monday
ruled that its purchase of a minority  stake in independent
financial services firm XP Investimentos SA needs further
analysis because of competition concerns.
    Shares of phone carrier Oi SA slumped after
bondholders shunned a revamped plan to restructure its debt,
saying it was too beneficial to shareholders. A group of Oi
creditors on Sunday demanded that the company's top executives
meet them as soon as possible to renegotiate the debt plan.

    Key Latin American stock indexes and currencies at 1510 GMT:
 Stock indexes                               daily %     YTD %
                                              change    change
 MSCI Emerging Markets              1131.18     0.47     30.58
 MSCI LatAm                         2950.82     -0.5      26.7
 Brazil Bovespa                    76679.61     -0.4     27.32
 Mexico S&P/BVM IPC                50149.34     0.33      9.87
 Chile IPSA                         5473.51     0.24     31.85
 Chile IGPA                        27417.24     0.27     32.23
 Argentina MerVal                  27140.80      0.3     60.43
 Colombia IGBC                     11084.02     0.21      9.44
 Venezuela IBC                       532.98    -0.19    -98.32
 Currencies                                  daily %     YTD %
                                              change    change
 Brazil real                         3.1664    -0.57      2.61
 Mexico peso                        19.1085    -1.04      8.56
 Chile peso                          619.35     0.56      8.29
 Colombia peso                      2933.18    -0.10      2.33
 Peru sol                             3.246     0.06      5.18
 Argentina peso (interbank)         17.3300     0.52     -8.40
 Argentina peso (parallel)            17.85     0.22     -5.77
 (Reporting by Bruno Federowski)
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