EMERGING MARKETS-Mexican peso dips on shake-up, Chile lags for the week

    * Chilean peso set to lose 2.7% this week
    * Latam FX down this week
    * Argentine stocks near record highs

 (Recasts with Mexican governor shuffle)
    By Ambar Warrick
    May 21 (Reuters) - Mexico's peso fell on Friday after the
government said it would replace central bank head Alejandro
Diaz de Leon after his term ends this year, while Chile's peso
led losses for the week on political concerns and falling copper
    The Mexican peso fell 0.4% after President Andres
Manuel Lopez Obrador said he would not propose a new term for
Governor Leon after his tenure ends on Dec. 31, and instead
nominate an economist with "social dimension."
    The move comes amid speculation that the central bank will
begin hiking rates this year, as inflation in Mexico heats up. 
    "We have had precedents where finance ministers or those
type of people come in and it brings the central bank and the
(government) administration closer together, which brings the
question of central bank independence, but we will have to wait
and see", said Viktor Szabo, a portfolio manager at ABRDN. 
    Chile's peso rose 0.4% on Friday but was set for a
weekly loss of about 2.7%, its worst in nearly two months, after
the country's ruling party failed to secure a majority in the
body that will draft the new constitution, with independent
candidates getting more votes.  
    A drop in copper prices also hurt the currency of the
world's largest producer of the red metal, while no. 2 producer
Peru's sol was set to lose about 1.7% this week. 
    Chilean stocks lagged their peers this week with a
more-than 10% loss.
    Broader Latam currencies fell, with MSCI's regional index
 down 0.3%, and was set to lose about 0.8% this
    Risk-driven assets, particularly in emerging markets,
tumbled earlier in the week after the minutes of the Fed's last
meeting showed more talk of stimulus tapering at the bank than
previously thought.
    While the deadline for the Fed to consider tapering is still
a way off, investors fear a continued rise in U.S. inflation
could bring the date forward. 
    Colombia's peso, which fell 0.4% on Friday, was also
set to lose more than 1% this week, after S&P Global Ratings 
downgraded the country to "junk," or sub-investment grade,
    Brazil's real shed 0.7% and was set for its
worst week in nearly two months. 
    Argentina's peso was flat. The country said it will
tighten COVID-19 lockdown measures due to a severe second wave
of the virus.
    However, Argentine stocks recently hit record highs
as tight capital controls on the peso saw equities become the
favored means of retaining exposure to the country. 
    Key Latin American stock indexes and currencies:
                              Latest     Daily % change
 MSCI Emerging Markets         1330.20               0.07
 MSCI LatAm                    2461.04              -0.93
 Brazil Bovespa              122181.81              -0.42
 Mexico IPC                   49697.31              -0.42
 Chile IPSA                    4079.99               1.23
 Argentina MerVal             56934.35             -0.307
 Colombia COLCAP               1257.48               0.23 Currencies             Latest     Daily % change
 Brazil real                    5.3139              -0.73
 Mexico peso                   19.9307              -0.35
 Chile peso                      718.2               0.35
 Colombia peso                  3729.7              -0.39
 Peru sol                        3.746              -0.96
 Argentina peso                94.2700              -0.02

 (Reporting by Ambar Warrick in Bengaluru; Additional reporting
by Marc Jones in London; Editing by Kirsten Donovan and Richard