November 26, 2018 / 3:03 PM / 15 days ago

EMERGING MARKETS-Brazil's real, Mexico's peso weaken on local factors

    By Sruthi Shankar
    Nov 26 (Reuters) - The Brazilian real and Mexican peso
weakened against the dollar on Monday on local factors, even as
the greenback stayed under pressure and the euro advanced on
reports Italy may cut its budget deficit target to satisfy the
European Union. 
    Mexico's peso edged 0.3 percent lower as caution
prevailed ahead of the results of a referendum on
President-elect Andres Manuel Lopez Obrador's new projects.
Brazil's real slid on a lack of dollar inflows triggered in part
by expectations of higher U.S. rates.
    The peso has been battered by worries about perceived policy
missteps by Lopez Obrador's team. After holding an informal
referendum in late October that drew only about 1 percent of
Mexican voters, Lopez Obrador said he would cancel a partly
built airport for the Mexican capital.
    The leftist, who takes office on Dec. 1, put 10 campaign
promises, including a railway line in southern Mexico and plans
to transfer cash to the young and elderly, up for vote in a
separate informal public consultation over the weekend, Nov.
24-25.
    "I think the markets are nervous about this and are going to
be closely watching for what the results are," said Edward
Glossop, emerging markets economist at Capital Economics,
London, specializing in Latin America.
    Credit Suisse analysts expect voter turnout at around
600,000 and a majority of voters to favor all 10 of Lopez
Obrador's proposals. 
    Brazil's real fell for a fourth day, partly because
of a year-end move by multinationals' local units to shift funds
to their headquarters, said Jose Faria Junior, director of
brokerage Wagner Investimentos.
    "Beyond that, the calendar is still pretty full this week
and next, above all in the U.S., with investors looking for
signs of the Fed's rate plans," he said.  
    The real fell more than 1 percent to near a two-month
low against the dollar.
    "Part of the weakness that we've seen recently is a reversal
in some of the gains that we saw after Bolsonaro's election. The
markets were very upbeat about the prospects of reform under
Bolsonaro," Glossop said.
    Brazil's main Bovespa jumped as retail stocks
including Via Varejo and Magazine Luiza
gained after better-than-expected sales performance on Black
Friday.
    Key Latin American stock indexes and currencies at 1432 GMT:
 Stock indexes                         daily      YTD % change
                                           %  
                           Latest     change  
 MSCI Emerging Markets        977.72    0.88            -16.34
                                              
 MSCI LatAm                  2540.75   -0.66             -9.56
                                              
 Brazil Bovespa             86536.23    0.35             13.26
                                              
 Mexico IPC                        -       -                 -
                                              
 Chile IPSA                  5140.49       -                 -
                                              
 Argentina MerVal           30990.96    0.87              3.08
                                              
 Colombia IGBC              11902.79       -              4.68
                                              
                                                              
 Currencies                            daily      YTD % change
                                           %  
                              Latest  change  
 Brazil real                  3.8822   -1.56            -14.65
                                              
 Mexico peso                 20.4390   -0.19             -3.62
                                              
 Chile peso                      678   -0.37             -9.34
                                              
 Colombia peso               3237.95   -0.38             -7.90
 Peru sol                      3.379   -0.03             -4.20
                                              
 
    

 (Additional reporting by Claudia Violante in Sao Paulo; Editing
by Jeffrey Benkoe)
  
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