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Brazil continues talks on spending control measures

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Chile only considered 25-bps rate cut in Oct, minutes show

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Brazil's Itau Unibanco ( ITUB ) jumps after bumping up credit

outlook

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MSCI Latam FX index up 0.1%, stocks index down 0.1%

(Updated at 3:00 p.m. ET)

By Johann M Cherian and Ankika Biswas

Nov 5 (Reuters) - The Mexican peso touched its lowest

level since late 2022 in a mixed trade for Latin American

currencies on Tuesday, as traders braced for a nail-biting U.S.

presidential election outcome that could set the tone for

foreign flows into the region.

Mexico's peso, which is expected to be the most

sensitive to the election results, depreciated 0.4%, briefly

touching its September 2022 lows and last trading at the

20-to-the-dollar mark.

The currency, along with the Brazilian real, has been

one of the hardest hit in the region, down over 15% so far this

year.

"Mexico faces the biggest risks... It's a

manufacturing-heavy economy with a deep reliance on the U.S. as

an export market. This makes the threat of a global tariff much

more disruptive," said Joaquin Kritz Lara, chief economist at

Numera Analytics.

On top of concerns around judicial reforms after President

Claudia Sheinbaum's Morena party secured large majorities in

Congress following June's election, possibility of a second

Donald Trump term has further unnerved investors as he seeks to

slap a new round of tariffs on Mexican exports.

Analysts expect a likely Trump victory to quickly weaken

the peso to more than 21 per U.S. dollar.

Earlier in the day, overnight volatility on the peso

had soared to touch its highest since the day of the

2016 vote on Nov. 8.

However, Trump is still neck and neck with Vice President

Kamala Harris in opinion polls, and the winner might not be

known for days after voting ends.

Analysts also view Trump's domestic tax policies as more

inflationary than Harris', which could lift the greenback and

U.S. Treasury yields and consequently diminish foreign inflows

into emerging markets broadly.

Meanwhile, Brazil's real climbed 0.7% against the greenback

to hit a one-week high, helping the MSCI Latam currencies index

erase early losses and trade 0.1% higher.

The country's local government continued high-level

discussions towards the announcement of anticipated spending

control measures, though it has not disclosed when they will be

unveiled.

Investors had sold off the currency despite rate hikes by

the local central bank on expectations that the region's largest

economy might not meet its fiscal targets for the year.

If fiscal talks prove successful, the Numera Analytics

economist sees a strong likelihood of larger gains in the real

as speculators could adopt long positions on the currency.

Investors also awaited interest-rate decisions out of

Brazil, due on Wednesday, and Peru on Thursday.

Chile's peso pared some of the day's losses and was

last down only 0.1%.

Minutes from the country's October monetary policy decision

showed the central bank's only plausible option was lowering the

benchmark interest rate by 25 basis points.

However, Chile's main stocks index was the worst

hit among its regional peers, down 1.6% to hit a three-week low.

Colombia's peso climbed 0.2% against the dollar amid

steady oil prices, while the Peruvian sol slipped 0.2%.

Among single stocks, Brazil's Itau Unibanco ( ITUB )

climbed 3.5% after the Latin America's largest private lender

bumped up its estimated annual portfolio growth.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1139.93 0.89

MSCI LatAm 2129.48 -0.08

Brazil Bovespa 130577.24 0.05

Mexico IPC 50712.31 -0.33

Chile IPSA 6524.21 -1.6

Argentina Merval 1906534.23 -0.653

Colombia COLCAP 1356.31 0.26

Brazil real 5.7523 0.68

Mexico peso 20.1805 -0.45

Chile peso 955.4 -0.13

Colombia peso 4406.78 0.16

Peru sol 3.772 -0.19

Argentina peso (interbank) 992.5 0.05

Argentina peso (parallel) 1115 4.93