September 13, 2018 / 4:00 PM / 2 months ago

EMERGING MARKETS-Brazil real underperforms on election jitters; LatAm currencies up

    By Bruno Federowski
    BRASILIA, Sept 13 (Reuters) - The Brazilian real fell on
Thursday due to mounting concerns around this year's elections,
underperforming other Latin American currencies which
strengthened after weaker-than-expected U.S. inflation figures.
    The real slipped 0.7 percent, weighed by concerns
that far-right presidential candidate Jair Bolsonaro may be
unable to campaign even in a likely second-round vote after he
underwent a successful emergency surgery overnight.
    Bolsonaro, who was stabbed in a campaign event last week,
has tapped a University of Chicago-trained banker as his main
economic adviser.
    Though some investors believed he could gain ground after
the incident due to a sympathy vote, a recent poll showed he
would likely lose in the second round to most of his main
rivals.
    Traders fear a leftist president would refrain from cutting
government spending to curb debt, which they see as necessary to
bringing back Brazil's investment grade sovereign rating.
    Those concerns weighed down the Brazilian real on a day when
currencies from Chile, Mexico and Colombia
 rose between 0.7 and 1 percent.
    The dollar fell to a near 1-1/2-month low against a group of
major currencies after data showed U.S. consumer prices
increased less than expected in August, paring traders' outlook
that domestic inflation is accelerating.
    Weaker inflation could drive the Federal Reserve to hike
rates more slowly, bolstering the demand for high-yielding,
emerging-market assets.
    Signs of reduced trade tensions between China and the United
States after Washington reached out to Beijing on Wednesday to
restart trade talks also lifted risk appetite worldwide.

    
    Key Latin American stock indexes and currencies at 1530 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
                                  Latest              
 MSCI Emerging Markets              1004.56     0.12   -13.28
 MSCI LatAm                         2426.89     2.01   -14.19
 Brazil Bovespa                    74664.70    -0.61    -2.27
 Mexico IPC                        49544.38     0.59     0.38
 Chile IPSA                         5327.20     1.23     1.23
 Argentina MerVal                  30120.55     1.26     0.18
 Colombia IGBC                     12325.56    -0.05     8.40
                                                             
 Currencies                                  daily %    YTD %
                                              change   change
                                     Latest           
 Brazil real                         4.1733    -0.69   -20.61
 Mexico peso                        18.8816     0.70     4.33
                                                      
 Chile peso                           681.1     1.00    -9.76
 Colombia peso                      3021.29     0.75    -1.30
 Peru sol                             3.325     0.15    -2.65
 Argentina peso (interbank)         38.6800    -0.47   -51.91
                                                      
 Argentina peso (parallel)            37.75     0.66   -49.06
                                                      
 
 (Reporting by Bruno Federowski; Editing by Bernadette Baum)
  
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