December 26, 2017 / 10:06 PM / 10 months ago

EMERGING MARKETS-Mexican and Argentine currencies fall amid index gains

 (Updates prices)
    By Bruno Federowski
    SAO PAULO/MEXICO CITY, Dec 26 (Reuters) - Mexico's peso on
Tuesday slid to its weakest level in almost 10 months due to
ongoing concerns over inflation and the potential impact of new
U.S. corporate tax cuts.
    The Argentine peso also weakened on Tuesday,
reaching an all-time low due to seasonal demand for U.S.
dollars. Shares, however, hit a record high after Argentina's
Congress approved key business-friendly legislation.   
    The Brazilian real and Chilean peso were the
only key Latin American currencies to strengthen.
    Mexico's peso rebounded briefly on Tuesday after
Mexico's central bank sold $500 million in foreign exchange
hedges to curb exchange rate volatility, but later dipped to its
weakest level since March 3.
    U.S. President Donald Trump signed a tax overhaul into law
on Friday that cut the corporate tax rate to 21 percent from 35
percent, fueling worries that Mexico would lose out on
investment to its northern neighbor.
    Trump's threats to tear up the North American Free Trade
Agreement (NAFTA) if he cannot renegotiate it in favor of the
United States have also weighed on the peso.
    Mexico's presidential election due in July 2018 has stoked
further uncertainty, and analysts say the peso could see
extended periods of volatility in coming weeks.
    In Argentina, lawmakers last week approved a pension reform
despite days of demonstrations by the bill's opponents, while
the legislature's lower house approved a plan for cutting
corporate income and employer social security
taxes.        
    Those actions helped push Argentina's benchmark MerVal index
 to close 0.98 percent above the previous session in its
sixth consecutive day of gains.  
    Trading in other Latin American markets was muted between
the Christmas and New Year's holidays.
    Shares in Brazilian planemaker Embraer SA rose
6.20 percent on lingering expectations of a potential tie-up
with Boeing Co, as the benchmark Bovespa stock index
climbed to its highest level since October. 
    Boeing on Friday sought to calm Brazilian concerns about the
possible deal after President Michel Temer and other officials
warned they would veto any full takeover bid.
    
    Key Latin American stock indexes and currencies at 2032 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1139.26     -0.16     32.34
                                                    
 MSCI LatAm                      2783.25      0.08     18.81
                                                    
 Brazil Bovespa                 75707.73      0.69     25.70
                                                    
 Mexico IPC                     48419.71      0.07      6.08
                                                    
 Chile IPSA                      5514.74     -0.41     32.84
                                                    
 Chile IGPA                     27745.20     -0.38     33.81
                                                    
 Argentina MerVal               29216.22      0.98     72.69
                                                    
 Colombia IGBC                  11260.98       0.1     11.19
                                                    
 Venezuela IBC                   1266.26      0.64    -96.01
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      3.3095      0.10     -1.82
                                                    
 Mexico peso                     19.8855     -0.93      4.32
                                                    
 Chile peso                       618.79      0.65      8.39
                                                    
 Colombia peso                      2965     -0.27      1.23
 Peru sol                           3.24     -0.15      5.37
                                                    
 Argentina peso (interbank)      18.3200     -1.26    -13.35
                                                    
 Argentina peso (parallel)         18.85     -2.92    -10.77
                                                    
 
 (Reporting by Bruno Federowski; Additional reporting by Miguel
Gutierrez and Daina Beth Solomon; editing by Diane Craft;
Editing by G Crosse)
  
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