EMERGING MARKETS-Most Latam FX inch up as dollar loses steam; poised for weekly gains

* Brazil’s inflation rises more than expected after rate cut * IMF highlights Chile’s strong fundamentals as domestic risks subside * Brazil’s Lula to reshuffle cabinet after Africa trip -minister * Latam FX up 0.2% (Updated at 1855 GMT) By Ankika Biswas and Bansari Mayur Kamdar Aug 25 (Reuters) – The Latin American currencies index reversed its early loss to eke out gains on Friday, as the dollar lost steam through the day’s course, while traders assessed Federal Reserve Chair Jerome Powell’s message on the need for further rate hikes. The MSCI’s index for Latam currencies gained 0.2%, with the dollar giving up its early gains that came on the back of Powell’s insistence to contain stubborn inflationary pressures at the much-awaited Jackson Hole Symposium. The index is poised for its best week since late March. “It seems that overall emerging market currencies have taken J Powell’s speech in stride, they have not interpreted it as a significant shift,” said Pedro Quintanilla-Dieck, emerging markets strategist at UBS Global Wealth Management. Quintanilla-Dieck said that U.S. interest rates staying higher for longer has been priced in and is not likely to act as a headwind to Latam currencies, that are also supported by high rates differential despite the onset of a policy easing cycle in the region. Meanwhile, Brazil’s real gained 0.3% against the greenback and was set for a 2% weekly gain. Inflation in Brazil accelerated for the third fortnight in a row in early August, data showed, adding to hopes that the central bank is unlikely to speed up the pace of interest rate cuts. Separately, Brazil’s Institutional Relations Minister Alexandre said that President Luiz Inacio Lula da Silva will announce a cabinet reshuffle after coming back from an Africa trip, although the exact date of the move is yet to be determined. Among other gainers, Mexican peso gained 0.4%, while top copper producer Chile’s peso edged up 0.1%, leading a regional advance for the week on rebound in prices of the red metal. Chile continues to qualify for a flexible credit line arrangement for some $18.5 billion, said the International Monetary Fund (IMF), due to its strong economic fundamentals and institutional policy frameworks. Meanwhile, central bank data showed Mexico posted a current account surplus of $6.25 billion, equivalent to 1.4% of gross domestic product, during the second quarter after registering a deficit in the first three months of the year. On the closely watched BRICS development, the expansion of the group of developing countries could provide a lifeline to capital-starved new entrants Iran and Argentina, but investors and analysts say a broader economic boon for the bloc’s members is far from certain. The Latam stocks index were down 0.2%, but off the day’s low, but still on track for its first weekly gain after three weeks of losses. Key Latin American stock indexes and currencies at 1855 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 972.15 -1.03 MSCI LatAm 2397.39 -0.17 Brazil Bovespa 115912.85 -0.95 Mexico IPC 53338.31 0.43 Chile IPSA 6041.93 -0.43 Argentina MerVal 622490.85 1.464 Colombia COLCAP 1100.06 -0.1 Currencies Latest Daily % change Brazil real 4.8624 0.34 Mexico peso 16.7456 0.41 Chile peso 844.1 0.08 Colombia peso 4124.65 -0.63 Peru sol 3.6903 -0.30 Argentina peso (interbank) 350.0000 0.00 Argentina peso (parallel) 720 0.69 (Reporting by Bansari Mayur Kamdar and Ankika Biswas in Bengaluru; Editing by Alistair Bell and Nick Zieminski)