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

    * Chilean peso set to lose 2.5% this week
    * Latam FX down this week
    * Argentine stocks near record highs

 (Updates prices throughout, adds comment)
    By Ambar Warrick and Shreyashi Sanyal
    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
prices. 
    The Mexican peso fell 0.5% 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% but was set for a weekly loss
of 2.5%, 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.  
    "We continue to think the (Chilean) peso will hold up better
than most EM currencies this year – while political uncertainty
is a key risk to that view, the peso already appears to discount
a substantial risk premium," Jonas Goltermann, senior markets
economist at Capital Economics wrote in a client note. 
    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
week.
    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 0.7%, was also set to
lose more than 1% this week, after S&P Global Ratings 
downgraded the country to "junk," or sub-investment grade,
status.
    Brazil's real shed 1.3% 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: 
    
           Stock indexes                   Latest    Daily %
                                                     change
 MSCI Emerging Markets                      1328.89    -0.03
 MSCI LatAm                                 2451.17    -1.33
 Brazil Bovespa                           122186.29    -0.42
 Mexico IPC                                49643.55    -0.53
 Chile IPSA                                 4079.99     1.23
 Argentina MerVal                          56438.44   -1.175
 Colombia COLCAP                            1246.12    -0.68
                                                            
              Currencies                   Latest    Daily %
                                                     change
 Brazil real                                 5.3460    -1.33
 Mexico peso                                19.9546    -0.47
 Chile peso                                   719.4     0.00
 Colombia peso                              3744.75    -0.79
 Peru sol                                     3.752    -1.12
 Argentina peso (interbank)                 94.2700    -0.02
                                                     
 Argentina peso (parallel)                      150     3.33
                                                     
 
 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru;
Additional reporting by Marc Jones in London; Editing by Richard
Chang and Marguerita Choy)
  
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