September 3, 2018 / 7:03 PM / 2 months ago

EMERGING MARKETS-Brazil real slumps on election, global selloff; Argentine peso tumbles

    By Bruno Federowski
    BRASILIA, Sept 3 (Reuters) - The Brazilian real slumped on
Monday as mounting concerns over this year's presidential
election added to global risk aversion, while the Argentine peso
extended its recent sell-off.
    Emerging market currencies in general have suffered in
recent weeks due to escalating trade tensions surrounding the
United States that investors believe could damage global growth.
    U.S. President Donald Trump said on Saturday there was no
need to keep Canada in the North American Free Trade Agreement
and warned Congress not to meddle with the talks to revamp NAFTA
or he would terminate the trilateral pact altogether.

    The real weakened 1.5 percent, nearing its weakest in
2-1/2 years, also weighed down by anxiety over October's
presidential election. 
    "There's a lot of uncertainty, both concerning the trade war
and the outcome of the elections. And liquidity is thin due to
the U.S. holiday," a trader at a São Paulo-based brokerage said,
referring to the U.S. Labor Day holiday.
    Other Latin American assets were also down, with Mexico's
 and Chile's currencies slipping 0.5 and 0.6
percent, respectively.
    But the Argentine peso led losses, deepening a
recent rout driven by growing bets against President Mauricio
Macri's ability to rein in a fiscal deficit and curb inflation.
    The move came even after the government unveiled a new
export tax and spending cuts aimed at fighting the currency
crisis while it continues to negotiate additional funding with
the International Monetary Fund (IMF).
    The peso is down over 50 percent this year, making it one of
the world's worst-performing currencies.
    
    Key Latin American stock indexes and currencies at 1830 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
                                  Latest              
 MSCI Emerging Markets              1055.96    -0.18    -8.85
 MSCI LatAm                         2463.79        1   -12.88
 Brazil Bovespa                    76355.35    -0.42    -0.06
 Mexico IPC                        49524.85    -0.05     0.35
 Chile IPSA                         5238.69     -0.6    -0.60
 Argentina MerVal                  28738.18     -1.9    -4.42
 Colombia IGBC                     12219.35    -0.29     7.46
                                                             
 Currencies                                  daily %    YTD %
                                              change   change
                                     Latest           
 Brazil real                         4.1317    -1.46   -19.81
 Mexico peso                        19.1836    -0.54     2.69
                                                      
 Chile peso                          682.85    -0.59    -9.99
 Peru sol                             3.301    -0.18    -1.94
 Argentina peso (interbank)         38.0000    -2.63   -51.05
                                                      
 
 (Reporting by Bruno Federowski
Additional reporting by Claudia Violante in São Paulo; Editing
by Dan Grebler)
  
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