* Mexican peso falls for second straight day
* Brazil real hit by fiscal, political woes
* Peruvian sol dips as govt plans mining taxes
(Adds details, updates prices)
By Shreyashi Sanyal and Ambar Warrick
Aug 26 (Reuters) - Latin American currencies fell on
Thursday as caution kicked in ahead of a major U.S. Federal
Reserve summit, while the spread of the Delta coronavirus
variant and a dip in commodity prices weighed on local assets.
Mexico's peso fell 0.6%, while Brazil's real
shed 0.8% as oil and base metal prices retreated.
The dollar rose from one-week lows, supported by gains in
U.S. Treasury yields as investors continued to focus firmly on
what signals the Fed might send at its annual conference.
All eyes will be on Fed chief Jerome Powell's speech on
Friday, where he could signal when the U.S. central bank plans
to start unwinding its monetary stimulus.
Brazil's real snapped a two-day winning streak. While the
government marked some progress in negotiations with the Supreme
Court in delaying mandated payments, concerns over stretched
fiscal spending, especially due to the pandemic, still clouded
the country's economic outlook.
"With the introduction of dividend taxation and the
reduction of the corporate tax rate, this reform should reduce
Brazil's short-term fiscal risk by increasing the tax burden on
investment," said Cecilia Godoy, analyst for Latin America
Research at FrontierView.
"Still, political pressures to spend during next year's
election cycle will remain elevated, continuing to pose credible
threats to the spending cap rule, Brazil's main fiscal anchor."
Mexico's peso extended losses into a second day, after data
showed the country's economy expanded at a slower-than-expected
pace in the second quarter.
Minutes of the Mexican central bank's recent meeting showed
some members of the rate-setting board believed inflation could
rise further this year, suggesting that more interest rate hikes
by the bank were a possibility, which could support the peso.
Mexican President Andres Manuel Lopez Obrador also allayed
some fears over oil production in the country after he said
Petroleos Mexicanos (Pemex) will produce about 1.8 million
barrels per day (bpd) by year end, despite a fire that has
knocked out a big chunk of output.
Chile's peso fell 0.3%, tracking declines in the
prices of its top export, copper.
World No. 2 copper producer Peru's sol dipped 0.1%
after Peruvian Prime Minister Guido Bellido said the government
plans to tax mining companies in the event of high commodity
prices, as part of a tax overhaul.
Latam stocks were weaker, taking cues from the rest of the
globe. Mexican stocks dropped 0.4% from near-record
highs.
Key Latin American stock indexes and currencies:
Latest Daily % change
MSCI Emerging Markets 1266.53 -0.69
MSCI LatAm 2445.84 -1.01
Brazil Bovespa 119293.09 -1.26
Mexico IPC 52159.51 -0.36
Chile IPSA 4445.77 0.18
Argentina MerVal 72317.48 0.428
Colombia COLCAP 1316.44 -1 Currencies Latest Daily % change
Brazil real 5.2508 -0.77
Mexico peso 20.3404 -0.62
Chile peso 785.9 -0.33
Colombia peso 3865.75 -0.06
Peru sol 4.0745 -0.09
Argentina peso 97.5200 -0.02
(interbank)
(Reporting by Shreyashi Sanyal and Ambar Warrick in Bengaluru;
editing by Jonathan Oatis)