September 13, 2018 / 8:31 PM / 8 months ago

EMERGING MARKETS-Election nerves weaken Brazil real; other LatAm currencies up

    By Bruno Federowski
    BRASILIA, Sept 13 (Reuters) - Brazil's currency and main
stock index fell on Thursday because of mounting concerns about
this year's elections, with the real underperforming other Latin
American currencies, which strengthened on weaker-than-expected
U.S. inflation figures.
    The real slipped 1.3 percent, weighed by concerns
that far-right presidential candidate Jair Bolsonaro, who was
stabbed at a campaign event last week, may be unable to campaign
even in a likely second-round vote.
    Bolsonaro, who successfully underwent emergency surgery
overnight, has tapped a University of Chicago-trained banker as
his main economic adviser.
    Though some investors believed he could gain ground after
the incident as a result of 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
bring back Brazil's investment grade sovereign rating.
    Those concerns weighed down the Brazilian real on a day when
currencies of Chile, Mexico and Colombia
all rose more than 0.9 percent.
    The dollar fell to a near 1-1/2-month low against a group of
other major currencies after data showed consumer prices in the
United States increased less than expected in August, reducing
traders' expectations of accelerating U.S. inflation.
    Weaker inflation could drive the Federal Reserve to hike
rates more slowly, bolstering the demand for high-yielding,
emerging-market assets.
    Risk appetite worldwide was also lifted by signs of reduced
trade tensions between China and the United States after
Washington reached out to Beijing on Wednesday to restart trade
   Key Latin American stock indexes and currencies at 1945 GMT:
 Stock indexes                             daily %   YTD %
                                            change  change
 MSCI Emerging Markets           1017.85      1.32  -13.28
 MSCI LatAm                      2419.95     -0.29  -14.19
 Brazil Bovespa                 74550.62     -0.76   -2.42
 Mexico IPC                     49680.95      0.86    0.66
 Argentina MerVal               30286.95      1.82    0.74
 Colombia IGBC                  12228.08     -0.84    7.54
 Venezuela IBC                 354704.53      5.93  27981.
 Currencies                                daily %   YTD %
                                            change  change
 Brazil real                      4.1981     -1.28  -21.08
 Mexico peso                     18.8450      0.93    4.53
 Chile peso                       681.41      0.95   -9.80
 Colombia peso                    3015.8      0.93   -1.12
 Peru sol                          3.314      0.48   -2.32
 Argentina peso (interbank)      39.5500     -2.65  -52.97
 Argentina peso (parallel)         38.25     -0.65  -49.73
 (Reporting by Bruno Federowski; Editing by Bernadette Baum)
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