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EMERGING MARKETS-Latam FX slip, Argentine peso hit by surprise twist in election

Credit: REUTERS/Ricardo Moraes

Most Latin American currencies weakened on Monday with Brazil's real giving up early gains and Argentina's peso sliding after a surprise twist in its presidential election.

By Susan Mathew

May 20 (Reuters) - Most Latin American currencies weakened on Monday with Brazil's real giving up early gains and Argentina's peso sliding after a surprise twist in its presidential election.

The currencies of Brazil BRL=, Colombia COP= and Peru PEN= traded between flat to 0.3% lower. Mexico's peso MXN=, however, firmed 0.1%.

Argentina's currency ARS= fell 0.9% after the main populist challenger in the presidential election, Cristina Fernandez de Kirchner, surprised investors by saying she would run as a vice presidential candidate and not for the top job.

"We view the market implications of this announcement as net negative," said analysts at Citi Research in a note. "Uncertainty has increased and thus markets will likely remain sensitive to the news flow in coming weeks as the political landscape shifts."

"It is difficult to assess the impact of the news on the election dynamics. We therefore expect high volatility as the story develops... (and) expect central bank intervention to smooth peso volatility if the market reaction is ultimately negative," they said.

Brazil's real BRL= slipped slightly, as concerns over slowing pace of the economy's growth intensified.

Brazilian President Jair Bolsonaro took to Twitter to emphasize the government's commitment to wide-ranging economic reforms, as a regular central bank survey of economists showed growth forecasts for this year slumping to a new low.

Lower house speaker Rodrigo Maia had said on Friday the house will vote on the government's pension reform bill no later than the start of July.

Growth concerns had investors alert for a more supportive policy stance from the central bank and saw the real lose 0.4% last week.

Shares in Sao Paulo .BVSP were up 0.3% at 1402 GMT in a volatile session as financial and energy stocks gained.

Stocks in Mexico .MXX and Colombia .IGBC fell, in line with world stocks that fell as concerns mounted about an escalating fallout from a U.S. crackdown on China's Huawei Technologies. MKTS/GLOB

Key Latin American stock indexes and currencies at 1405 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

993.90

-0.25

MSCI LatAm .MILA00000PUS

2529.36

0.09

Brazil Bovespa .BVSP

90958.10

1.07

Mexico IPC .MXX

43335.37

-0.25

Chile IPSA .SPCLXIPSA

4928.15

0.05

Argentina MerVal .MERV

-

-

Colombia IGBC .IGBC

12214.90

-0.18

Currencies

Latest

Daily % change

Brazil real BRBY

4.1006

-0.02

Mexico peso MXN=D2

19.1215

0.22

Chile peso CLP=CL

697.1

-0.20

Colombia peso COP=

3331.48

-0.34

Peru sol PEN=PE

3.339

-0.27

Argentina peso (interbank) ARS=RASL

45.3400

-0.66

(Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell)

((susan.mathew@thomsonreuters.com; +91-80-6749-1130; Reuters Messaging: susan.mathew.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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