* Next Brazilian rate hike could be 100 bps * Dollar retreats as Powell speaks * Latam stocks retreat (Adds graphic, updates prices) By Susan Mathew and Ambar Warrick June 22 (Reuters) – Brazil’s real hit a one-year high as minutes of the central bank’s recent meeting suggested a more hawkish stance than previously thought, while Chile’s and Mexico’s pesos rose as commodity prices stabilized from recent losses. The real surged nearly 1% to a one-year high of 4.970, as central bank minutes showed a 100-basis point hike could be coming at the next meeting to keep inflation in check. This would be the monetary authority’s fourth straight hike, and would put rates at 5.25%, their highest since October 2019, well before the COVID-19 pandemic spurred a cutting cycle. Liam Spillane, head of EM debt at Aviva Investors, said in an interview he sees an upside in Brazil’s real and said its recent outperformance can continue at this level as central bank policy should support the currency in coming months. The dollar retreated after Federal Reserve Chair Jerome Powell flagged weakness in the job market, which is likely to keep the Fed from hiking rates anytime soon. He also expressed his confidence in inflation remaining transitory. Powell’s comments somewhat soothed emerging markets, which had come under pressure from the Fed’s hawkish tilt last week. Chile’s peso rose 0.5% as copper prices rose from a 10-week trough, while Mexico’s peso added 0.7% after oil prices rallied on expectations of recovering demand. On Thursday, Mexico’s June first-half inflation followed by a central bank meeting, will be in focus. A Reuters poll showed annual inflation likely slowed but still stayed well above the central bank’s target range, reinforcing forecasts that benchmark interest rate will remain on hold for the rest of 2021. Among stocks, Latin America’s biggest power utility Eletrobras hit record highs before retreating, after a Lower House approval of a bill for its long-pending privatization left just one step more – the president’s signature – for its implementation. The privatization will be the biggest in Brazil’s history, with proceeds from the sale potentially reaching 100 billion reais ($20 billion), the Economy Ministry said on Tuesday. Brazil’s Bovespa index lost 1% to hit one-month lows, led by financials. Most other regional peers also fell, tracking a choppy session on Wall Street. Cryptocurrencies have recently gained traction among some countries in the region. While El Salvador last week announced plans to use bitcoin as a parallel legal tender alongside the U.S. dollar, in Venezuela, cryptos are traded by a service that helps non-residents send remittances. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1348.06 -0.18 MSCI LatAm 2644.50 0.99 Brazil Bovespa 128319.80 -0.73 Mexico IPC 50007.69 -0.61 Chile IPSA 4368.05 1.69 Argentina MerVal 65394.98 0.398 Colombia COLCAP 1247.30 0.07 Currencies Latest Daily % change Brazil real 4.9745 0.95 Mexico peso 20.3653 0.54 Chile peso 742.1 0.66 Colombia peso 3779.1 -0.58 Peru sol 3.9787 -0.68 Argentina peso 95.4900 -0.12 (interbank) (Reporting by Susan Mathew and Ambar Warrick in Bengaluru; additional reporting by Karin Strohecker in London, Editing by William Maclean)
