* Turkish lira hits new low
* Latam FX steady as dollar dips
May 29 (Reuters) - The Turkish lira slid to a record low on Monday as President Tayyip Erdogan's victory in the weekend election rattled investors, while most Latin American currencies rose on expectations the United States will avoid a debt default.
The struggling lira fell 0.6% to fresh record low of 20.10 per dollar, adding to its 7% fall since the start of the year and a 90% slump over the past decade. Istanbul bourses , however, rose on the day.
Erdogan's re-election extends his rule into a third decade, granting him five more years to pursue increasingly authoritarian policies that have polarized Turkey, which is grappling with a cost of living crisis, a plunging currency and depleted foreign reserves.
"An Erdogan win offers no comfort for any foreign investor," said Hasnain Malik, head of equity research at Tellimer. "A painful crisis affecting all assets is on the way, with very high inflation, very low interest rates and no net foreign reserves."
Investors are worried about a looming economic crisis, hurt by soaring inflation and a possible extension of Erdogan's unorthodox policies that included cutting interest rates to tame spiraling prices.
"Shorting TRY remains incredibly expensive but the President's favored approach of cutting rates to tackle inflation will likely make it less so over time," noted Elsa Lignos, head of FX strategy at RBC Capital Markets.
Meanwhile, most Latin American currencies rose against a weaker dollar after U.S. President Joe Biden finalized a budget agreement with House of Representatives Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until Jan. 1, 2025, and said the deal was ready to move to Congress for a vote.
Trading volumes were however light, with markets in the United States, the UK and several European countries closed. The main Latin American stock markets were mixed. Brazil's Bovespa slipped 0.5%, while Chile's S&P IPSA edged up.
With the dollar broadly slipping, the Mexican peso climbed half a percent to 17.55 per dollar, while the Brazilian real steadied at 4.99 per dollar.
Economists expect Brazil's inflation index to hit 5.71% at the end of this year, the median forecast of a weekly central bank survey showed, down from 5.80% in the previous week.
Finance Minister Fernando Haddad on Friday said the country is about to enter a downward cycle of interest rates, pointing out that inflation is "more behaved." (Reporting by Sruthi Shankar and Amruta Khandekar in Bengaluru Editing by Alistair Bell)
