The Brazilian Real erased early losses on Tuesday after state prosecutors charged Workers Party vice presidential candidate Fernando Haddad with corruption, driving investors to pare bets on his electoral strength.
Haddad's candidacy is not in danger of being blocked, as it would be virtually impossible for a trial to play out before the country's elections next month.
Lula, who has led opinion polls, has railed against austerity and investors believe he is unlikely to pursue spending cuts or privatizations necessary to bring back Brazil's investment grade sovereign rating even if he were elected.
The Brazilian Real turned flat after the charge against Haddad, moving away from the emerging-market rout that hit currencies from Chile, Mexico, Colombia and Argentina.
Stock markets across the region also suffered. Brazil's Bovespa dipped almost 2%.
Trade tensions have rattled global and emerging markets, with fears rising again after Trump's announcement over the weekend that there was no need to keep Canada in the North American Free Trade Agreement.
This followed a report that Trump was prepared to ramp up a trade war with China and could be ready to impose more tariffs on Chinese imports as soon as Thursday.