Mexican peso leads declines among Latam currencies

* Elections in Uruguay this week * Mexico’s mulls tax incentives to lure foreign companies * Brazilian planemaker Embraer up after 33% rise in Q3 deliveries * Latam FX down 0.5%, stocks off 0.7% (Updated at 2011 GMT) By Shashwat Chauhan and Johann M Cherian Oct 21 (Reuters) – Mexico’s peso led declines among major Latin American currencies on Monday, as the dollar strengthened and investors priced in a greater chance that former U.S. president Donald Trump could return to the White House next month. Mexico’s peso depreciated 0.7% to 19.98 per dollar, briefly breaching the psychologically important level of 20 intraday, an instance that happened for the second time in less than a week. The country’s key trading partner is the U.S. and Trump has proposed a 200% tariff on vehicles imported from Mexico among other incendiary remarks on security and immigration. Separately, a trade official told Reuters that Mexico is considering tax credits to attract foreign firms to invest and produce domestically, targeted at electric vehicle (EV), semiconductor, rare earth minerals, battery and electronics sectors. MSCI’s index tracking regional currencies lost 0.5% as the dollar firmed. Trump’s policies are viewed as potentially stoking inflation pressures, and thereby likely to keep U.S. interest rates high and undermine the currencies of emerging markets. StoneX analysts said “that the plan could lead to an inflationary impact, which might limit the Fed’s ability to lower interest rates to neutralize the impact. As a result, investors are expected to maintain gradual rate cut expectations.” Brazil’s real was flat at 5.68 to the dollar. The country’s central bank chief Roberto Campos Neto highlighted a “huge” de-anchoring of inflation expectations in the country, adding that it is “very important” to bring inflation back to target, and that policymakers are committed to doing so. Chile’s peso held firm at 952.9 per dollar, hovering near its lowest level since August, while Colombia’s peso and Peru’s sol lost 0.1% and 0.4% respectively in light trading. Most Latin American assets have come under pressure as investors bet on more stimulus measures from one of the largest commodities consumer China to aid its faltering property sector, with recent announcements failing to meet the expectations. On the equities front, MSCI’s gauge for regional bourses shed 0.7%, with Brazil’s Bovespa flat. Among single stocks, BTG Pactual lost 1.4% after the investment lender received preliminary approval to buy the hotel operations of AccorInvest in Brazil for 1.7 billion reais ($300 million). Hypera surged 2.6% after pharmaceutical company EMS offered to combine the two companies, which would create the country’s largest player in the sector. Embraer jumped 4.2% after the planemaker published an increase in quarterly deliveries. Mexico’s benchmark and Colombia’s Colcap index lost 0.4% each. Global finance chiefs will gather in Washington this week as part of the International Monetary Fund and World Bank annual meetings. A summit of the BRICS group – Brazil, Russia, India, China and South Africa – which has expanded to include Egypt, Ethiopia, Iran and the United Arab Emirates, will be held in Russia from Oct. 22-24. Uruguay will be going to the polls for the first-round vote on Oct. 27, with center-left presidential candidate Yamandu Orsi currently the front-runner. Key Latin American stock indexes and currencies: Latin American market prices from Reuters MSCI Emerging Markets 1146.84 -0.72 MSCI LatAm 2173.97 -0.70 Brazil Bovespa 130389.52 -0.08 Mexico IPC 52811 -0.41 Chile IPSA 6671.07 0.41 Argentina Merval 1820687.4 -0.145 8 Colombia COLCAP 1356.34 -0.42 Brazil real 5.6886 0.07 Mexico peso 19.9859 -0.69 Chile peso 952.9 0.06 Colombia peso 4270.64 -0.13 Peru sol 3.765 -0.39 Argentina peso 983 -0.20 (interbank) Argentina peso (parallel) 1220 0.41 (Reporting by Shashwat Chauhan and Johann M Cherian in Bengaluru; editing by Ed Osmond and Aurora Ellis)