November 10, 2016 / 2:07 AM / 2 years ago

EMERGING MARKETS-Mexico's peso suffers after Trump victory

By Michael O'Boyle and Miguel Gutierrez
    MEXICO CITY, Nov 9 (Reuters) - Mexico's peso fell on
Wednesday after Republican Donald Trump won the U.S. presidency
in a stunning upset, chasing away investors fearful of new
policies that could hurt growth in Latin America's second
biggest economy. 
    Trump's threats to dump the North American Free Trade
Agreement with Mexico and Canada and to tax money sent home by
Mexican migrants to pay for a border wall have made the peso
vulnerable to events in the U.S. presidential race.
    The peso fell by 8.3 percent, to 19.84 per dollar, on
Wednesday, paring losses from after-close trading on Tuesday,
when Trump's advances toward victory sent the currency down 13
percent to a record low of 20.77 per dollar, its biggest fall in
22 years.
    The currency  got little succor from Finance
Minister Jose Antonio Meade and Central Bank Chief Agustin
Carstens, who announced no new measures to shore up the peso at
a news conference early on Wednesday. 
    Mexico-based economists had expected a snap interest rate
rise, but Carstens said the bank would take any necessary
measures pending market conditions. 
    Mexico's IPC stock index slipped 2.23 percent to
47,390 points, its biggest drop since June, dragged down by a
7.44 percent drop in shares of Banorte, the
country's most important Mexican-owned bank. 
    Brazil's real  slid 1.33 percent, to 3.2095 per
dollar, even though some analysts said they saw a limited impact
in Brazil from a Trump presidency.
    "My base case scenario is that today was a one-off event,"
Cristiano Oliveira, chief economist at Banco Fibra, said.
    The Brazilian central bank said it will pause its daily
auctions of reverse currency swaps, which function like dollar
purchases by investors for future delivery, for at least
Thursday to assess "current market conditions."
    The move was a setback to the central bank's year-old plan
to unload its costly exposure to traditional currency swaps,
equivalent to future dollar sales, after years of intervention
left it holding more than $100 billion in foreign
currency-linked derivatives late last year. 
    Brazil's Bovespa stock index fell 1.4 percent to
63,258 points, dragged down by shares of state oil giant
Petrobras, which declined by 2.29 percent after the
company announced a cut in fuel prices.
    Shares in Cielo SA, the country's largest provider
of payment services, fell 3.15 percent after the company said
that competition in Brazil's credit and debit card-processing
markets will continue to be fierce in coming months, although
pricing is unlikely to suffer. 
  Key Latin American stock indexes and currencies at 01:18 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets            884.65      0.51     10.83
 MSCI LatAm                      2494.17     -4.08     36.31
 Brazil Bovespa                 63258.27      -1.4     45.92
 Mexico IPC                     47390.66     -2.23     10.27
 Chile IPSA                      4295.32     -0.18     16.71
 Chile IGPA                     21424.78     -0.19     18.03
 Argentina MerVal               17024.89     -0.66     45.82
 Colombia IGBC                  10057.26     -0.01     17.67
 Venezuela IBC                  20763.12     13.24     42.33
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      3.2095     -1.33     23.04
 Mexico peso                       19.84      -8.3    -13.16
 Chile peso                          649     -0.37      9.35
 Colombia peso                    3002.5     -1.64      5.55
 Peru sol                          3.373     -0.69      1.22
 Argentina peso (interbank)      14.9200      0.13    -12.99
 Argentina peso (parallel)         15.33      0.26     -6.91
 (Writing by Alexandra Alper; Editing by Leslie Adler)
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