EMERGING MARKETS-Mexico peso hits 9-month low on corruption scandal, U.S. tax plan
(Updates prices) By Bruno Federowski and Miguel Gutierrez BRASILIA/MEXICO CITY, Dec 22 (Reuters) - The Mexican peso hit a nine-month low on Friday, battered by a U.S. tax overhaul and domestic corruption scandals that boost a leftist front-runner's chances in next year's elections.
U.S. President Donald Trump signed sweeping tax legislation into law on Friday, slashing the U.S. corporate rate to 21 percent from 35 percent beginning on Jan. 1.
The bill has prompted worries in Mexico that the country could lose out on investment to its northern neighbor. Concerns that it may foster inflation and force the Federal Reserve to hike interest rates have also weighed on demand for emerging market currencies.
The Mexican peso weakened 1.37 percent, leading losses among Latin American currencies at 19.75 units per dollar.
"I don't think 20 pesos (per dollar) will be difficult to reach before the end of the year, but it will probably happen in the first quarter, above all with the next round of talks to renegotiate the North American Free Trade Agreement," Banco Base analyst Gabriela Siller said.
Concerns that corruption scandals could boost presidential candidate Andres Manuel Lopez Obrador, whose nationalist pledges could stir tensions with Trump's administration, added to pressure.
On Wednesday, authorities arrested a former high-ranking official of the PRI, the latest in a string of damaging allegations to batter Mexico's centrist ruling party.
Trading volumes were thin across the region as investors avoided big bets ahead of Christmas. The Chilean peso slipped 0.37 percent, while the Brazilian real fell 0.14 percent.
Brazil's benchmark Bovespa stock index stayed nearly flat, with shares of planemaker Embraer SA falling 1.4 percent. The company's shares had risen 22 percent the day before, after Embraer said it was in talks with Boeing Co over a potential tie-up.
Brazilian President Michel Temer said on Friday that he opposed Boeing taking control of Embraer, though he would welcome an injection of foreign capital into the regional planemaker.
Key Latin American stock indexes and currencies at 2123 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1141.09 0.59 32.34 MSCI LatAm 2780.93 -0.35 18.81 Brazil Bovespa 75186.53 0.07 24.84 Mexico IPC 48387.93 -0.24 6.01 Chile IPSA 5537.60 1.59 33.39 Chile IGPA 27851.01 1.44 34.32 Argentina MerVal 28931.54 1.58 71.01 Colombia IGBC 11249.98 0.29 11.08 Venezuela IBC 1258.20 -1.73 -96.03 Currencies daily % YTD % change change Latest Brazil real 3.3369 -0.14 -2.63 Mexico peso 19.7480 -1.37 5.04 Chile peso 622.8 -0.37 7.69 Colombia peso 2957 0.21 1.50 Peru sol 3.235 0.99 5.53 Argentina peso (interbank) 18.0650 -0.64 -12.12 Argentina peso (parallel) 18.25 -0.88 -7.84 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn and Lisa Shumaker)
