Hedge fund manager Jim Chanos, the prominent short-seller, said Tuesday he has lightened up on some of his bets against Brazil, saying most of the country's downside risk is priced in after the sharp selloff over the past two months.

"Yes, we are still short but we've taken some profits," Chanos said, speaking at a Reuters summit. "I think we'd be crazy not to."

Brazilian stocks have been hammered over worries about the country's presidential election, which incumbent Dilma Rousseff narrowly won on Sunday.

Her victory sent shares plunging as investors fretted about the leftist president.

Brazil's benchmark Bovespa stock index .BVSP has slid more than 18 percent from early September through its close on Monday. The index is heavily weighted toward miner Vale (VALE5.SA) and state-run oil company Petrobras(PETR4.SA) .

"I think a lot of it is priced in already now" in Latin America's biggest economy, he said to Reuters.

"I wouldn't be jumping wholeheartedly into the Brazil (short) trade here," he said. Nevertheless, he added that he remains short on "a lot of things in Brazil."

Chanos, who specializes in making money when stock prices decline and first cemented his reputation as a short seller with bets against Enron, is the founder of Kynikos Associates.

Chanos has previously spoken about shorting Petrobras and Vale.

Last week he said that Petrobras "exists to serve the state," an opinion he reiterated on Tuesday.

In the second quarter, the company saw profit slump 20 percent from a year earlier, reflecting in part a squeeze caused by the conflicting economic policy goals of its controlling shareholder, the Brazilian government.

For example, the government has reduced the amount of cash Petrobras has available to pay for new investments to tap offshore oil resources by forcing it to subsidize domestic gasoline and diesel fuel. The restrictions are aimed at helping the government control inflation.

"You might argue it's a stroke of genius," Chanos said on Tuesday, because foreign investors are thus helping fund Brazilian government efforts.

Both Vale and Petrobras fell sharply on Monday, the first trading day after Rousseff's victory.

Petrobras, which has also been hurt by a corruption scandal and falling global oil prices, dropped 12 percent on Monday. On Tuesday, those shares were last up 3 percent.

Vale, which exports heavily to China, saw its shares fall about 4 percent on Monday. On Tuesday, its shares were last down 0.1 percent.

The Bovespa stock index .BVSP was last up 2.35 percent on Tuesday.