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EMERGING MARKETS-Romania's leu slips after smaller rate hike; Brazilian real extends losses

       By Susan Mathew
       Nov 8 (Reuters) - The Romanian leu slipped on Tuesday
after the country's central bank slowed the pace of interest
rate hikes, while other emerging market currencies were mixed as
investors braced for volatility in the dollar tied to the U.S.
midterm elections.
    The leu eased 0.3%, hitting session lows to last
trade at 4.89 per euro.
    In its 10th straight hike, the central bank lifted the
benchmark interest rate by 50 basis points to 6.75%, its highest
level in more than a decade, saying inflation would not fall
into single digits until 2024.
    But the move disappointed the majority view for a
75-basis-point hike.
    "With inflation pressures likely to reach a peak soon and
signs of a downturn in Romania's economy to become more evident
over the coming months, we think the central bank may opt for an
even smaller 25-basis-point hike at its next meeting in January,
and that could mark the end of the tightening cycle," said
Nicholas Farr, emerging Europe economist at Capital Economics.
    The leu's move was in line with weakness in its regional
peers. Hungary's forint and the Polish zloty
slipped around 0.3% each against a weaker euro.
    Among other emerging market currencies, Brazil's real
edged 0.3% lower, extending the previous session's 2% slide,
which ended seven straight sessions of gains.
    Fears are growing of increased fiscal spending by Brazilian
President-elect Luiz Inacio Lula da Silva, Commerzbank analysts
said. Brazil is on thin-ice with fiscal spending following
social welfare measures rolled out in the aftermath of the
COVID-19 pandemic.
    But the real could gain again should Lula appoint
market-friendly ministers to his cabinet, and could trade above
the 5.00 mark to the dollar for the "time being", Commerzbank
    Elsewhere, Asian units, except the Chinese yuan,
rose, as did the Chilean and Colombian pesos.
Russia's rouble hit one-month highs.
    South Africa's rand slipped 0.4% while Mexico's peso
 was down 0.2%.
    The dollar made small swings with voting in the U.S. midterm
elections underway. The results will determine control of
Congress, which is currently held by President Joe Biden's
Democrats. Investors are generally betting that Republicans will
win control of the House of Representatives and possibly the
Senate, leading to political gridlock in Washington that could
prevent radical policy changes.
    Turkey's lira slumped 0.9%, more than giving back
Monday's 0.7% gain. The central bank told top bank executives
that it will continue decisively with market regulating policies
that have been criticised by the banking sector.
    Turkish banks, now enjoying record profits, face a painful
reversal of fortune next year as tough regulations loosen their
grip on balance sheets.
    Key Latin American stock indexes and currencies:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets          899.43      0.23

 MSCI LatAm                    2293.85      -0.6

 Brazil Bovespa              115922.92       0.5

 Mexico IPC                       0.00         0

 Chile IPSA                    5322.95      0.63

 Argentina MerVal            148958.98     0.764

 Colombia COLCAP               1244.69      0.04

       Currencies             Latest    Daily %
 Brazil real                    5.1666     -0.20

 Mexico peso                   19.5058     -0.33

 Chile peso                      910.9      0.52

 Colombia peso                 5025.56      1.56
 Peru sol                        3.938      0.05

 Argentina peso               159.7000     -0.21

 (Reporting by Susan Mathew in Bengaluru; Editing by Paul Simao)

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