SAO PAULO: The Brazilian real weakened on Wednesday after lawmakers voted to water down the austerity demands in a states debt relief bill, fueling concerns over the government's fiscal agenda.
The lower house of Congress approved late on Tuesday scrapping a requirement that states increase charges on public employees to fund their pensions in exchange for suspending debt payments for three years.
The move invited worries that President Michel Temer's administration might find it harder than expected to gather support for a revamp of the country's bloated pension system, at the center of its reform agenda.
Cutting public spending and curbing growth of public debt is seen as key to lifting Brazil out of its deepest recession on record.
The Brazilian real weakened 1.5 percent, among the biggest decliners in Latin American currency markets, which slipped for a second day on bets US President Donald Trump's tax-cutting plans could force US interest rates to rise faster.
Trump will release a tax plan on Wednesday that proposes to sharply slash rates on businesses and overseas corporate profits returned to the United States, officials said.
The proposals are expected to be unveiled at the White House at 1:30 ET (1730 GMT) on Wednesday by Treasury Secretary Steve Mnuchin and Trump economic adviser Gary Cohn.
The Mexican peso, which has been especially vulnerable to political developments in the United States, fell 1.5 percent.
The country expects to start renegotiating the North American Free Trade Agreement (NAFTA), which Trump has pledged to scrap, in late August and talks should be completed within six months, Mexico's economy minister said on Wednesday.
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