The peso slipped nearly 2% to hit a day's low of 19.16 to the dollar, a level not seen since early February, as investors dreaded the spillover from not only the collapse of SVB , a major lender to tech startups, but also Signature Bank that went under on Sunday.
Mexican stocks slipped 0.9%, while the broader MSCI Latin American stocks gauge slipped 1.8%. The Latam stocks index is headed for a near one-month low.
"Mexico's proximity to the U.S., be it via economic, financial, or monetary policy links, may leave Mexican assets especially exposed to weakness north of the border," said Juan Manuel Herrera, senior strategist at Scotiabank.
Mexico is closely integrated with the U.S. economy, relying on it for a steady stream of remittances and trade. U.S. authorities rushed to shore up investor confidence in the banking system by launching emergency measures, with emerging market currencies starting the day on a positive note against steep declines in the dollar but trading turned volatile amid fears of a broader financial crisis.
Riskier plays such as emerging market assets have been under pressure after restrictive U.S. monetary policy continued to strengthened the dollar, and the closure of SVB came as the largest bank failure since the 2008-2009 financial crisis. Brazil's real fell 0.3%, while Colombia's peso slipped almost 1% tracking falls in oil prices.
Elsewhere in Latam, Peru declared a state of emergency after a powerful cyclone unleashed torrential rains, battering hundreds of homes and causing major disruptions in northern areas of the Andean country. The sol fell 0.6%.
Chile's peso was a rare gainer on the day, as investors assessed President Gabriel Boric announcement of a major cabinet reshuffle on Friday, including the foreign minister. Key Latin American stock indexes and currencies at 1525 GMT:
Stock indexes Latest Daily
%
change
MSCI Emerging Markets 962.81 0.79
MSCI LatAm 2142.63 -1.79
Brazil Bovespa 103608.3 -0.01
6
Mexico IPC 52317.50 -0.9
Chile IPSA 5337.12 -1.05
Argentina MerVal 232139.0 -1.811
0
Colombia COLCAP 1170.06 -1.45
Currencies Latest Daily
%
change
Brazil real 5.2264 -0.37
Mexico peso 18.8270 -1.84
Chile peso 798.5 -0.40
Colombia peso 4758.2 -0.97
Peru sol 3.7984 -0.46
Argentina peso (interbank) 201.7900 -0.52
Argentina peso (parallel) 374 -0.27
(Reporting by Shreyashi Sanyal in Bengaluru
Editing by Marguerita Choy)
