Mexican peso leads Latam FX lower after last week's spike
Updated at 10:30 a.m. ET/ 1430 GMT
Brazil's Petrobras jumps after MS upgrade
Mexico's ruling bloc confirmed supermajority in lower house
Latam stocks up 0.7%, FX off 0.1%
By Shashwat Chauhan
Aug 26 (Reuters) -Most Latin American currencies slipped after spiking in the last session on Monday, as the dollar regained some footing after hitting multi-month lows last week, while Mexico's peso lagged after ruling party Morena secured a supermajority in parliament.
Mexico's peso MXN= slipped almost 1% to 19.2775 per dollar after rising more than 2% in the last session, as investors remained wary of local political developments.
Mexico's electoral authority late on Friday confirmed that ruling party Morena and its allies will hold a two-thirds supermajority in the lower house but fall just short of that level in the Senate when the new legislative term begins in September.
The Morena party intends to approve the first part of a series of constitutional changes proposed by outgoing President Andres Manuel Lopez Obrador for the period starting Sept. 1., including a controversial reform of the judiciary that would allow judges and magistrates to be elected by popular vote, a move that has rattled markets.
"The MXN has been buffeted by the prospect of passage of Mexico's judicial reform, and those worries won't fade soon," said Thierry Wizman, global FX & rates strategist at Macquarie.
"(However), we won't concede to the panic until we see if the reform is actually passed."
Brazil's real BRL= was flat at 5.4918 per dollar after jumping 1.7% in the previous session, while Colombia's peso COP= held firm at 4019.87 per dollar after rising more than 1% on Friday.
Copper producer Chile's peso CLP= ticked 0.3% higher as prices of the red metal rose, supported by a rebound in demand in China and on hopes of a U.S. rate cut in September. MET/L
Most emerging market currencies surged in the last session, while the dollar =USD sagged, after Federal Reserve Chair Jerome Powell on Friday said "the time has come" to lower interest rates, endorsing an imminent start to the U.S. policy easing cycle at the economic symposium at Jackson Hole.
The dollar index perked up 0.1%, pressuring Latin American currencies.
Speaking at the same event, Brazil's central bank chief said on Saturday that discussing monetary policy transmission will become increasingly difficult without addressing fiscal issues.
Amongst equities, Brazil's Bovespa .BVSP added 0.9%, boosted by jump of about 5% jump in state-owned oil firm Petrobras PETR4.SA after brokerage Morgan Stanley upgraded its rating.
Adding to gains were elevated crude oil prices, which spiked on reports of a near total production stoppage in Libya.
MSCI's index for emerging markets stocks .MILA00000PUS rose 0.7%, while a gauge for currencies .MILA00000CUS edged 0.1% lower.
Global markets remained on edge after militant group Hezbollah launched hundreds of rockets and drones at Israel early on Sunday, as Israel's military said it struck Lebanon with around 100 jets to thwart a larger attack, in one of the biggest clashes in more than 10 months of border warfare.
HIGHLIGHTS
** S&P downgrades Kenya's rating to 'B-' on weaker fiscal and debt trajectory
** Brazil's central bank needs to be more cautious due to strong economy, director says
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1104.24 | 0.32 |
MSCI LatAm .MILA00000PUS | 2308.04 | 0.66 |
Brazil Bovespa .BVSP | 136888.96 | 0.94 |
Mexico IPC .MXX | 53714.51 | 0.42 |
Chile IPSA .SPIPSA | 6477.23 | 0.22 |
Argentina Merval .MERV | 1618184.25 | 0.698 |
Colombia COLCAP .COLCAP | 1335.89 | 0.37 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.4918 | -0.1 |
Mexico peso MXN= | 19.2775 | -0.96 |
Chile peso CLP= | 905.75 | 0.25 |
Colombia peso COP= | 4019.87 | 0.04 |
Peru sol PEN= | 3.7505 | -0.7 |
Argentina peso (interbank) ARS=RASL | 948 | -0.158227848 |
Argentina peso (parallel) ARSB= | 1330 | 1.503759398 |
Major EM currencies so far this year https://tmsnrt.rs/3AEWxC6
Reporting by Shashwat Chauhan in Bengaluru; Editing by Sharon Singleton
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