May 31, 2018 / 10:37 PM / 18 days ago

EMERGING MARKETS-Mexico peso hits 15-mth low as Trump trade dispute hurts NAFTA hopes

    MEXICO CITY, May 31 (Reuters) - Mexico's peso slumped past
20 per dollar on Thursday after U.S. President Donald Trump
kicked off a trade conflict over steel and aluminum, dealing a
major blow to hopes for a quick deal to revamp the North
American Free Trade Agreement (NAFTA).
    The peso fell by as much as 1.6 percent to 20.05 pesos per
dollar, its lowest level in almost 15 months. It later pared
some of its losses to close down 0.9 percent, still the biggest
loser among mostly weak currencies in Latin America.
    The peso shed 6 percent during May, hit by a broad dollar
rally as well as uncertainty about NAFTA talks and Mexico's 
presidential election on July 1, where a leftist candidate leads
opinion polls.
    May was the worst month for the peso since Trump's election
in November 2016.
    Mexico's S&P/BMV IPC stock index also ended down
slightly to post a monthly loss of 7.65 percent, its worst
monthly performance since February 2009, Reuters data showed.
    Mexico announced immediate retaliatory measures for Trump's
steel and aluminum tariffs against U.S. allies, the European
Union, Canada and Mexico. 
    It would now be "very difficult" to finish NAFTA talks
before Mexico's election, economy minister Ildefonso Guajardo
said.
    The trade dispute "increases the risk of a bigger decline in
the peso during June, especially if it's confirmed that the
renegotiation of NAFTA is put off," said Gabriela Siller, an 
analyst at Banco BASE, in a research note.
    Mexico, the United States and Canada have been deadlocked in
the nine-month-long NAFTA talks over U.S. demands to increase
the amount of regional content required for autos built under
the accord, as well as several other contentious proposals.
    Other Latin American currencies also slipped, with Chile's
peso shedding about 0.7 percent and Colombia's peso losing about
0.5 percent against the dollar. 
    Brazil's stock market was closed for a holiday, but the
country showed signs of returning to normal on Thursday as an
oil workers union ended a strike ahead of schedule and an 11-day
trucker protest appeared to wind down.
    The strikes drove Brazil's benchmark stock index to a five
month low during the week. 
  
    Latin American stock indexes and currencies at 2200 GMT:
    
 Stock indexes                     Latest       Daily  YTD pct
                                                  pct   change
                                               change  
 MSCI Emerging Markets               1,120.71    0.72    -3.26
 MSCI LatAm                          2,560.53   -0.18    -9.46
 Mexico S&P/BMV IPC                 44,662.55   -0.12    -9.51
 Chile IPSA                          5,455.09   -0.54    -1.97
 Chile IGPA                         27,625.84   -0.58    -1.27
 Argentina MerVal                   28,558.83     0.6    -5.01
 Colombia IGBC                      12,297.04   -0.05     8.15
 Venezuela IBC                      36,189.35    3.71  2765.03
                                                              
 Currencies                            Latest   Daily  YTD pct
                                                  pct   change
                                               change  
 Brazil real                           3.7237    0.31   -11.02
 Mexico peso                          19.9075   -0.90    -1.05
 Chile peso                            631.70   -0.74    -2.70
 Colombia peso                       2,877.50   -0.47     3.19
 Peru sol                               3.270    0.18    -1.01
 Argentina peso (interbank)           24.9675   -0.17   -25.03
                                                       
 Argentina peso (parallel)              25.92   -0.27   -25.61
                                                       
 
 (Reporting by Miguel Gutierrez; editing by Grant McCool)
  
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