EMERGING MARKETS-Latam currencies rally as dollar eases after surge

By Susan Mathew Aug 8 (Reuters) - Latin American stocks and currencies jumped on Monday, joining a global rally, as investors came out of a risk-off mood spurred by rising bets the U.S. Federal Reserve will stay aggressive in September. As the dollar gave back some of its stellar gains, emerging market currencies capitalized. Strong U.S. jobs data on Friday had taken bets of a 75 basis points hike by the Fed in September to 70%, fuelling flows into the dollar. "Expect DXY to hold near its recent highs of 107. But if the dollar is not going anywhere in a hurry, there could be renewed interest in the carry trade," said Chris Turner, global head of markets and regional head of research for UK & CEE. "Of the available carry, we think the near 10% levels offered through the three-month Mexican peso implied yields look attractive. Here Banxico does a good job of keeping USD/MXN stable." Mexico's peso was up 0.8%, with inflation data on Tuesday preceding an interest rate decision by the central bank later in the week. The median forecast of 14 analysts projects that annual inflation will hit 8.13% in July, a level not seen since December 2000, fueling bets the country's central bank will continue to hike its key interest rate through the rest of the year. On Thursday, the bank is seen hiking by 75 basis points to 8.50%, as per Refinitiv. High borrowing costs in the United states have previously spurred currency crises in emerging markets, but analysts say central banks in the developing world are more prepared this time round, although the economic implications of the Russia-Ukraine war are unclear. Brazil's real surged 0.7%, while currencies of Colombia and Chile climbed 1% each. After Colombia's first leftist president, Gustavo Petro, took office on Sunday, a $5.8 billion tax reform, which would raise duties on high earners to fund social programs, will be proposed to congress on Monday. In line with a strong move higher on Wall Street, Latam stocks jumped, with Brazil's Bovespa index up 1.5%, hitting a two-month high. Mexico's main index extended gains to a fifth straight session. Key Latin American stock indexes and currencies at 1447 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1002.48 -0.04 MSCI LatAm 2189.67 2.1 Brazil Bovespa 107991.53 1.43 Mexico IPC 47289.36 1.21 Chile IPSA 5242.20 0.57 Argentina MerVal 122715.84 1.415 Colombia COLCAP 1312.15 0.93 Currencies Latest Daily % change Brazil real 5.1331 0.65 Mexico peso 20.2578 0.77 Chile peso 909.1 0.92 Colombia peso 4302.6 0.77 Peru sol 3.8922 0.12 Argentina peso 133.5500 -0.47 (interbank) (Reporting by Susan Mathew in Bengaluru; editing by Barbara Lewis)