* Brazil doubles tax on foreign investment in bonds to 4 pct
* Move announced after presidential vote, before IMF meeting
* Economists doubt measure will have lasting effect (Adds quotes and details)
By Ana Nicolaci da Costa and Samantha Pearson
BRASILIA/SAO PAULO, Oct 4 (Reuters) - Brazil on Monday doubled a tax on foreign investors buying local bonds, trying to curb a currency rally that has turned into an issue in the country's presidential race.
As emerging economies globally struggle to cope with hot investment inflows that have pushed up their currencies, Finance Minister Guido Mantega said the so-called IOF tax will rise to 4 percent from 2 percent starting on Tuesday.
Finance ministers and central bankers are expected to focus on what Mantega has called an "international currency war" at an International Monetary Fund meeting in Washington this week.
The United States, struggling to recover from its deepest recession since World War II, has said China distorts the global economy by undervaluing its currency.
Many emerging economies instead blame ultra-low interest rates in the United States and other rich countries for hot-money flows into their markets.
With Brazilian interest rates among the world's highest at 10.75 percent, foreign investors are pouring cash into the South American country in search of steep returns.
Despite problems faced by Brazilian exporters, analysts had doubted the government would announce new measures after Sunday's presidential election, with some predicting that new moves to curb the real would only come after a runoff on Oct. 31.
Analysts at RBS said the move suggested the government was trying to counter vulnerability of the ruling party's candidate, leftist Dilma Rousseff, on the issue of the real after she failed to see off her main challenger, opposition candidate Jose Serra during a first round of voting on Sunday.
"I think the electoral impact is limited but it could make it harder for Serra to criticize the government for not doing enough to curb the real's rally," said Ricardo Amorim, president of Ricam Consultoria, a Sao Paulo consulting firm.
Analysts expected limited impact from the tax hike.
Brazil and other Latin American countries trying to shield exporters from losing competitiveness.
"Various countries are taking currency measures, no one is sleeping on the job," Mantega told reporters in Brasilia.
Colombia's central bank in September began buying dollars to curb a currency rise. On Monday, Chile's president said the central bank should do more to tame the Chilean currency. Peru's central bank has also intervened often this year to buy dollars.
"We risk having a trade war and that's the worry," Mantega added. "It is preferable that we take coordinated measures instead of isolated measures."
LITTLE IMPACT ON REAL
The tax was introduced last October to deter speculation in Brazilian financial markets. But it has had little impact in one of the world's fastest-growing emerging economies.
In addition to attractive interest rates, Brazil recently hosted the largest-ever stock offering: a $70 billion share sale by state oil firm Petrobras which attracted a a flood of foreign funds.
The flows have pushed Brazil's real to a two-year high, creating a headache for exporters and the government.
The real has rallied about 7 percent against the dollar since the end of June. The surge has come even as the central bank stepped up its intervention in the foreign exchange market, calling two daily auctions to buy dollars for much of September and buying as much as $1 billion a day.
The government could still resort to using its sovereign wealth fund to buy dollars in the spot market or the central bank could hold an auction of reverse currency swaps -- a form of derivative, which would effectively allow Brazil's central bank to buy U.S. dollars in the futures market.
After rallying more than 100 percent since President Luiz Inacio Lula da Silva took office in 2003, the real is now the world's most overvalued currency, according to Goldman Sachs.
The increased tax could give others a headache by diverting some funds that would go to Brazil into other countries.
"It's going to distribute the flows into Colombia and Mexico. Those places will come under some pressure. They may just be forced into measures similar to Brazil's if their currencies begin to appreciate too rapidly," Enrique Alavarez, head of fixed-income research at IDEA Global in New York said.
The government left the IOF tax unchanged at 2 percent for the purchase of Brazilian stocks by foreigners, Mantega said.
The Brazilian real dipped after the announcement, but was still trading firmer than the key 1.70 threshold, which analysts believe is the authorities' unofficial comfort level.
The real last stood at 1.6975, according to the international reference rate.