July 9, 2019 / 7:22 PM / 11 days ago

EMERGING MARKETS-Mexico peso, stocks drop after finance minister quits

 (New throughout, updates prices, market activity and comments)
    By Agamoni Ghosh
    July 9 (Reuters) - Mexico's peso and stock market fell on
Tuesday after Finance Minister Carlos Urzua quit abruptly with a
scathing resignation letter, while trading volumes for the rest
of region were muted, with markets closed in Brazil and
Argentina.  
    The peso tumbled over 2% on the news and the
benchmark Mexican IPC stock index slid almost 1.5%. Both
pared losses after President Andres Manuel Lopez Obrador
appointed deputy finance minister Arturo Herrera to replace him.
    Urzua resigned and posted a scathing letter on Twitter that
said some policy decisions were made without "sufficient
foundation." Goldman Sachs in a note to investors
called the resignation "an unexpected and negative development."

    The Obrador administration had hoped the U.S.-trained
economist would help it sell its reform agenda to skeptical
international investors. 
    Urzua had deep differences over economic issues with
Obrador, whose policy decisions have been questioned by
investors since cancellation of a major airport project.
    "The fiscal situation in Mexico has been the main concern
for a while now and given the reaction don't think the move is
over yet for the peso," said Christian Lawrence, senior market
strategist, Latam FX, Rabobank.  
    "We should see repercussions of this for the next few days
and the tone is likely to be more negative than positive."
    Other currencies were more or less subdued with the Chile's
peso shedding about 0.3% as prices of copper, the
country's top export, fell to a three-week low. Colombia's peso
 was little changed.
    Investors will now focus on Fed chief Jerome Powell's
testimony to the Congress and release of minutes on Wednesday
from the U.S. central bank's last policy meeting.
    Emerging markets have enjoyed capital inflows this year on
signs major central banks would embrace a looser monetary policy
as a result of trade disputes and growth concerns.
    However, strong U.S. jobs data on Friday hit expectations of
a bold interest rate cut from the Fed's meeting this month,
leaving investors in search of hints on where rates are headed. 
    
Key Latin American stock indexes and currencies at 1900 GMT   
 Stock indexes                Latest      Daily %
                                           change
 MSCI Emerging Markets          1,042.05     -0.4
                                          
 MSCI LatAm                     2,917.38    -0.48
                                          
 Brazil Bovespa                        -        -
                                          
 Mexico IPC                    42,921.50    -1.53
                                          
 Chile IPSA                     5,040.10    -0.52
                                          
 Argentina MerVal                      -        -
                                          
 Colombia IGBC                 12,852.99     0.04
                                          
                                                 
 Currencies                       Latest  Daily %
                                           change
 Brazil real                           -        -
                                          
 Mexico peso                     19.1208    -1.08
                                          
 Chile peso                        689.2    -0.36
                                          
 Colombia peso                    3216.4    -0.08
 Peru sol                          3.296    -0.33
                                          
 
 (Reporting by Agamoni Ghosh and Sruthi Shankar in Bengaluru;
Editing by David Gregorio)
  
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