May 20, 2019 / 2:22 PM / a month ago

EMERGING MARKETS-Latam FX slip, Argentine peso hit by surprise twist in 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, Colombia and Peru
 traded between flat to 0.3% lower. Mexico's peso,
however, firmed 0.1%. 
    Argentina's currency 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 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 were up 0.3% at 1402 GMT in a
volatile session as financial and energy stocks gained. 
    Stocks in Mexico and Colombia 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.
        
    Key Latin American stock indexes and currencies at 1405 GMT:
 
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          993.90     -0.25
                                        
 MSCI LatAm                    2529.36      0.09
                                        
 Brazil Bovespa               90958.10      1.07
                                        
 Mexico IPC                   43335.37     -0.25
                                        
 Chile IPSA                    4928.15      0.05
                                        
 Argentina MerVal                    -         -
                                        
 Colombia IGBC                12214.90     -0.18
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    4.1006     -0.02
                                        
 Mexico peso                   19.1215      0.22
                                        
 Chile peso                      697.1     -0.20
                                        
 Colombia peso                 3331.48     -0.34
 Peru sol                        3.339     -0.27
                                        
 Argentina peso                45.3400     -0.66
 (interbank)                            
                                        
 

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