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Brazil central bank decision due at 2130 GMT

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Mexican peso hit two-year low in early trade

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Argentina debt risk index drops after Trump win

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MSCI Latam stocks index up 1.5%, FX climbs nearly 2%

(Updated at 3:30 p.m. ET)

By Ankika Biswas and Johann M Cherian

Nov 6 (Reuters) - Mexico's peso turned volatile after an

early slide on Wednesday, with the Brazilian real jumping 1% and

bucking the weak trend across Latin American currencies as

investors assessed Donald Trump's victory in the U.S.

presidential election.

The Mexican peso, perceived as most sensitive to a

Trump win, had slumped over 3% against the dollar to its lowest

level since August 2022, before turning positive and once again

slipping back into the red. It was last down 0.4% at around 20

to the dollar.

Even the country's stocks shrugged off the initial sell-off,

with the main stock index last up over 1%. Argentina's

benchmark stock index hit a record high, up nearly 3%.

"We do need to recognize the peso has been among the

worst-performing EM (emerging market) currency this year. In

other words, a lot of the Trump rhetoric, around Mexican trade

and immigration, in addition to domestic challenges, was already

priced in," said Alejo Czerwonko, chief investment officer for

emerging markets in the Americas at UBS Global Wealth

Management.

While 200% tariffs on cars coming from Mexico and mass

deportations are some key concerns, analysts said Mexico has

some leverage, particularly on migration, that could help dilute

some of Trump's pledges in trade and security.

The currency, which is down 15% this year, was predicted to

fall to 21 per dollar in a second Trump term.

"MXN is backed also by the fact that overnight volatility

faded. It did not translate into multiple days and nights or

potentially weeks of uncertainty. It seems markets are content

that this contest isn't dragging longer than necessary," said

Juan Perez, director of trading at Monex.

Citigroup ( C/PN ) added a short position on the peso versus the

South African rand after the U.S. elections.

However, with Brazil's real hitting a two-week high,

the MSCI index tracking Latam currencies

reversed early losses to jump nearly 2%.

Gains in the real were supported by Brazil's finance

minister saying the government has concluded talks on new

measures to strengthen the fiscal framework, seen as crucial to

improving the valuation of the country's risk assets.

Brazil's interest-rate decision is due later in the day.

Despite local rate hikes, the real is down over 14% in 2024

on concerns that the largest Latam economy might not meet its

annual fiscal targets.

Meanwhile, top copper producers Chile's peso was the

worst hit among its regional peers, down 0.6% to April lows, and

Peru's sol slipped 0.1% tracking a tumble in prices of

the red metal.

Peru's monetary policy decision is due on Thursday.

A strong dollar, which was up 1.6% after hitting a

four-month intraday high, also weighed on Latam currencies.

Argentina's dollar bonds had also jumped in early trade and

risk index 11EMJ dropped sharply, with investors cheering the

prospect of closer ties between libertarian President Javier

Milei and Trump.

The MSCI index tracking Latam stocks was

also up 1.5%, hitting an over one-week high.

Key Latin American stock indexes and currencies:

Equities Latest Daily % change

MSCI Emerging Markets 1131.27 -0.69

MSCI LatAm 2154.42 1.54

Brazil Bovespa 130377.42 -0.22

Mexico IPC 51379.84 1.08

Chile IPSA 6579.55 0.85

Argentina Merval 1982811.62 2.668

Colombia COLCAP 1361.48 0.13

Currencies Latest Daily % change

Brazil real 5.6808 1.22

Mexico peso 20.181 -0.42

Chile peso 960.33 -0.57

Colombia peso 4409.48 -0.14

Peru sol 3.776 -0.11

Argentina peso (interbank) 992.5 0.05

Argentina peso (parallel) 1115 4.93