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Brazil's cenbank not cornered into raising rates- director

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Mexico cenbank minutes underscore disagreements over rate

cut

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Mexico's GDP, inflation data support September rate cut

bets

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Brazil's Vibra to buy remaining stake in Comerc

(Updated at 4:03 p.m. ET/ 2003 GMT)

By Shubham Batra and Ankika Biswas

Aug 22 (Reuters) - Brazil's real and Mexico's peso

spearheaded a broad-based fall in Latin American currencies on

Thursday, while stocks also withered, as the dollar gained ahead

of the all-important speech by Federal Reserve Chair Jerome

Powell on Friday.

MSCI's gauge of Latam currencies fell nearly

2%, dropping for the third straight session.

The Brazilian real weakened nearly 2% against the greenback,

down for the third day to a two-week low, emerging as the

worst-hit Latam currency on the day.

The country's central bank monetary policy director Gabriel

Galipolo said he disagrees with those who interpret his recent

statements as suggesting the central bank is cornered into

raising interest rates.

This comes in light of the July policy meeting minutes

earlier this month that showed the central bank won't hesitate

to raise interest rates if necessary to bring inflation down.

"So far, we maintain our view of no Selic rate increase as

the most likely outcome, but incoming data/events will be

crucial to calibrate our expectations, given the data dependent

approach that has been adopted by the Copom," Citi analysts

said.

The Mexican peso also dropped 1% to an over two-week

low, extending its decline for a fourth session, after a series

of data showed inflation slowed more than expected while growth

remained tepid, opening the door to a new rate cut next month.

The day was also marked by Mexico's policy meeting minutes

that revealed two members of the Bank of Mexico's five-person

governing board saw the August rate cut as premature and flagged

it could undermine the bank's credibility.

Among others, Colombia's peso and Chile's peso

fell nearly 1% and 0.3%, while Peru's sol also

erased early gains to fall 0.3%.

All eyes will be on Powell at 10 a.m. ET on Friday at the

Jackhole Hole economic symposium. His comments will provide

investors much-needed rate guidance to investors, who have fully

priced in a 25 basis point cut in September.

A gauge of Latin American stocks also

dropped around 3%, on track for its biggest one-day drop since

early June, dragged down by Brazilian and Mexican stocks.

Brazil's benchmark stock index fell almost 1%

after hitting a fresh record high in the last session.

Brazilian fuel distributor Vibra tumbled nearly

4% after it had signed an agreement to exercise its right to buy

the remaining stake in power generator and trader Comerc for

3.52 billion reais ($642 million).

Key Latin American stock indexes and currencies at 2003 GMT:

MSCI Emerging Markets 1099.61 -0.12

MSCI LatAm 2253.95 -2.67

Brazil Bovespa 135173.89 -0.95

Mexico IPC 53525.35 -0.63

Chile IPSA 6470.17 -0.39

Argentina Merval 1584215.7 -2.274

7

Colombia COLCAP 1335.52 -0.88

Brazil real 5.5893 -1.89

Mexico peso 19.4738 -1.06

Chile peso 918.83 -0.32

Colombia peso 4064.5 -0.94

Peru sol 3.7427 -0.25

Argentina peso (interbank) 945 -0.052910053

Argentina peso (parallel) 1330 1.879699248