SAO PAULO: The Mexican peso slipped on Monday ahead of the latest round of trade negotiations between Mexico, the United States and Canada later this week.
Concerns that US President Donald Trump could make good on his threats to scrap the North American Free Trade Agreement (NAFTA) have battered the Mexican currency in recent weeks. Trump has put forward increasingly strict demands in the negotiations.
"The market is no longer optimistic on seeing any significant gain in this round of negotiations, and is actually concerned that differences will widen," economists at Continuum Economics wrote in a client note.
Mexico sells over three-quarters of its exports to the United States.
Nevertheless, losses in the Mexican currency have been limited by the Mexican central bank's assurance that it could act to cushion the currency's decline.
The central bank has sold foreign hedges repeatedly in a bid to curb potential inflationary pressure from a weaker currency. In its last policy statement, the bank flagged risks to inflation saying it was necessary to maintain a prudent monetary policy given multiple risks faced by the economy, including trade with the United States.
The peso fell 0.3 percent on Monday, in line with other Latin American currencies. The Brazilian real weakened 0.3 percent, while the Colombian peso dipped 0.2 percent.
Emerging market currencies have seen some volatility in recent weeks as the outlook for a US tax overhaul became increasingly unclear.
Many investors had bet on further losses in emerging markets in case Trump's tax plan stoked inflation and forced the Federal Reserve to hike interest rates faster than expected.
But lawmakers' resistance to such plans has reduced such prospects. Senate Republicans have unveiled a new tax plan that differs from the version in the House of Representatives, and there are few signs of a compromise.
Brazil's benchmark Bovespa stock index was nearly flat as concerns over President Michel Temer's ability to pass a constitutional amendment streamlining the social security system lingered.
Units, a blend of common and preferred shares, in Renova Energia SA slumped nearly 9 percent after Brookfield Asset Management Inc unveiled a binding proposal for the renewable energy firm below Friday's closing price.
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