September 27, 2016 / 4:36 PM / 2 years ago

EMERGING MARKETS-Mexico peso rises after U.S. presidential debate

By Bruno Federowski
    SAO PAULO, Sept 27 (Reuters) - The Mexican peso strengthened
on Tuesday as traders cheered Democrat candidate Hillary
Clinton's performance against Republican Donald Trump in the
first presidential debate.
    Many traders fear a Trump victory could threaten Mexican
exports to the United States, its biggest single market.
    The peso  firmed 2.2 percent to its strongest
in a week on Tuesday rebounding from its weakest-ever drop last
week as polls showed growing support for a Trump presidency.
    Clinton put Trump on the defensive on Tuesday night by
accusing him of being racist, sexist and a tax dodger.
    But analysts say Mexican markets should remain volatile
until the Nov. 8 elections as the outcome remains far from
    That has boosted a debate over whether the Mexican central
bank could increase rates to support the peso over the coming
    Nomura Securities analysts believe it would be too early for
a hike in next week's policy meeting, while the bank's gathering
in Nov. 17 could prove to be too late.
    They recommended investors keep up bets in the peso's
weakness, possibly protecting themselves against volatility with
FX options.
    "We think the prevailing bias in the market (USDMXN upwards)
will persist until we get a definitive result on election night
or polls suggest an outcome with a high degree of confidence, an
event that we see as unlikely for the time being," they wrote in
a report.
    Rates paid on Mexican interest futures were down
across the board. Brazilian rate futures <0#2DIJ:> also dropped
after the country's central bank reduce its inflation forecasts,
fostering bets on a rate cut as soon as October. 
    Latin American stock markets, however, were mixed as a drop
in crude prices weighed on shares of oil companies such as
Brazil's Petróleo Brasileiro SA . 
    Shares in Brazilian financial exchange BM&FBovespa SA
 also fell after the country's antitrust regulator
opened up a probe into whether the bourse engaged in
anticompetitive behavior. 

    Key Latin American stock indexes and currencies at 1615 GMT:
 Stock indexes                                 daily %   YTD %
                                                change  change
 MSCI Emerging Markets                910.35      0.54   14.02
 MSCI LatAm                          2373.56       0.3   29.33
 Brazil Bovespa                     57765.44      -0.5   33.25
 Mexico IPC                         47491.04       0.5   10.50
 Chile IPSA                          4047.60     -1.02    9.98
 Chile IGPA                         20178.79     -0.85   11.17
 Argentina MerVal                   16133.96     -1.36   38.19
 Colombia IGBC                       9757.95     -1.26   14.16
 Venezuela IBC                      12838.19      1.39  -12.00
 Currencies                                    daily %   YTD %
                                                change  change
 Brazil real                          3.2368      0.31   21.94
 Mexico peso                         19.4590      2.21  -11.45
 Chile peso                            662.2     -0.09    7.17
 Colombia peso                       2906.39      0.50    9.05
 Peru sol                              3.366      0.03    1.43
 Argentina peso (interbank)          15.2625     -0.15  -14.94
 Argentina peso (parallel)              15.8      0.00   -9.68

 (Reporting by Bruno Federowski; Editing by Diane Craft)
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