October 24, 2017 / 8:00 PM / in a year

EMERGING MARKETS-Mexico peso weakens for third day on Fed, NAFTA jitters

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, Oct 24 (Reuters) - Mexico's peso on Tuesday
weakened for a third straight day to its lowest point in more
than five months on lingering uncertainty over U.S. monetary
policy and concerns about the nation's trade ties with the
United States.
    Traders have been wary of emerging market assets in recent
weeks as lack of clarity over who will next head the Federal
Reserve cast doubts over the pace of U.S. interest rate hikes in
coming months.
    Growing bets that current Fed Chair Janet Yellen could be
replaced by a more hawkish policymaker have dampened demand for
high-yielding assets, which could suffer as U.S. interest rates
go up.
    Among Latin American currencies, the Mexican peso has been
under particular stress from talks between the United States,
Canada and Mexico on trade.
    U.S. President Donald Trump's strict demands have fueled
concerns that he could make good on threats to scrap the North
American Free Trade Agreement (NAFTA), dealing a blow to the
highly U.S.-dependent Mexican economy.
    The Mexican peso on Tuesday slipped 0.58 percent.
The Brazilian real fell 0.09 percent, hit by concerns of
fading lawmaker support for President Michel Temer's platform of
structural reforms.
    The lower house of Congress is set to vote on Wednesday
whether to put Brazil's unpopular center-right president on
trial for corruption charges. Traders widely expect him to dodge
the accusations, as he did with a first set of charges earlier
this year, but a smaller show of support could hurt his reform
    "If fewer lawmakers vote to clear Temer, markets will tense
up. Not even a watered down version of his pension reform plans
would pass Congress in such an unfavorable environment,"
Advanced brokerage trader Alessandro Faganello said.
    Brazilian stocks, however, rose 0.98 percent as
shares of wood pulpmaker Fibria SA jumped. Fibria
posted net income of 743 million reais ($229 million) in the
third quarter, up from 32 million reais a year ago, and forecast
a tighter pulp market in the second half of the year.

    Key Latin American stock indexes and currencies at 1910 GMT:
 Stock indexes                             daily %      YTD %
                            Latest          change     change
 MSCI Emerging Markets          1112.86      -0.27      29.41
 MSCI LatAm                     2885.75      -0.18      23.51
 Brazil Bovespa                76153.15       0.98      26.44
 Mexico IPC                    50084.10       1.08       9.73
 Chile IPSA                     5536.29      -0.43      33.36
 Chile IGPA                    27748.69      -0.36      33.83
 Argentina MerVal              27875.04       0.33      64.77
 Colombia IGBC                 10904.12       0.23       7.66
 Venezuela IBC                   663.97       8.36     -97.91
 Currencies                                daily %      YTD %
                                            change     change
 Brazil real                     3.2497      -0.09      -0.02
 Mexico peso                    19.1945      -0.58       8.07
 Chile peso                         632       0.16       6.12
 Colombia peso                     2977      -0.85       0.82
 Peru sol                         3.236       0.09       5.50
 Argentina peso                 17.4950      -0.46      -9.26
 Argentina peso                   18.09      -0.11      -7.02
 (Reporting by Bruno Federowski; Editing by Meredith Mazzilli)
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