August 22, 2018 / 10:01 PM / a month ago

EMERGING MARKETS-Mexico peso, stocks up on optimism over possible NAFTA deal

 (Recasts on NAFTA news, updates prices)
    By Bruno Federowski
    BRASILIA, Aug 22 (Reuters) - Mexico's peso currency and its
stock market gained on Wednesday  as officials grow increasingly
optimistic over the possibility of a successful renegotiation of
the North American Free Trade Agreement in the coming days.
    In Washington, Mexican and U.S. officials said they were
close to resolving remaining bilateral issues in the NAFTA
revamp, but hopes of squaring away remaining sticking points on
Wednesday were booted to at least later this week.
    The prospect of a breakthrough helped the Mexican peso rise
1.17 percent against the dollar, while the country's benchmark
S&P/BMV IPC stock index was up 1.09 percent.
    In Brazil, the real currency extended its sell-off early on
Wednesday past the 4 to the dollar milestone before paring
losses to gain 0.24 percent.
    Investors in Brazil have turned increasingly pessimistic
over the October presidential election.
    A string of voter intention polls have shown business
favorite Geraldo Alckmin stuck in the single digits. Jailed
former President Luiz Inacio Lula da Silva has consistently led
the ballot, followed by far-right lawmaker Jair Bolsonaro.
    "Surveys are pointing to a clear-cut scenario where Alckmin
does not take flight," Rico Investimentos brokerage analyst
Roberto Indech said.
    The Brazilian real had fallen in the last six trading
days, a move that accelerated after it breached the 4 to the
dollar level on Tuesday for the first time since February 2016.
    Other emerging currencies were mostly up, with those of 
Chile, Colombia and Peru firming between
0.27 percent and 0.62 percent.
    Risky assets found support this week after U.S. President
Donald Trump's criticism of the Federal Reserve's interest rate
hikes, which seemed to question the central bank's independence.
    Minutes of the Fed's latest meeting showed central bankers
discussed raising interest rates soon to counter excessive
economic strength.
    Higher U.S. rates could lure capital away from emerging
markets, which offer steeper returns.
    
    Key Latin American stock indexes and currencies at 2054 GMT:
    
 Stock indexes              Latest    Daily pct    YTD pct
                                         change     change
 MSCI Emerging Markets     1,050.61         0.6      -9.31
                                                 
 MSCI LatAm                2,505.54        0.52     -11.41
                                                 
 Brazil Bovespa           76,902.30        2.29       0.65
                                                 
 Mexico IPC               49,880.34        1.09       1.07
                                                 
 Argentina MerVal         26,872.47        3.17     -10.62
                                                 
 Colombia IGBC            12,161.90        0.32       6.96
                                                 
 Venezuela IBC            410,937.4       21.89  32,433.01
                                  4              
                                                          
 Currencies               Latest      Daily pct    YTD pct
                                         change     change
                                                 
 Brazil real                 4.0452        0.24     -18.09
                                                 
 Mexico peso                18.7300        1.17       5.17
                                                 
 Chile peso                  661.45        0.36      -7.08
                                                 
 Colombia peso                2,959        0.62       0.78
 Peru sol                     3.284        0.27      -1.43
                                                 
 Argentina peso             30.2100       -0.70     -38.43
 (interbank)                                     
                                                 
 Argentina peso               30.65       -0.98     -37.26
 (parallel)                                      
                                                 
 
 (Additional reporting by Claudia Violante in Sao Paulo and
David Alire Garcia in Mexico City; Editing by Dan Grebler)
  
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