EMERGING MARKETS-Peru's sol star Latam performer this week, Chile's peso drops

    * Peru's sol up more than 4% this week
    * Chile's peso hit by political uncertainty 
    * Brazil inflation outlook in doubt 

    By Ambar Warrick
    Oct 15 (Reuters) - Chile's peso slumped to a 15-month low on
Friday as political uncertainty weighed, while Brazil's real
rose after the central bank said inflation would likely peak
this month.
    Peru's sol was the biggest gainer in Latin America
this week, set for its best week in more than 30 years as a more
moderate turn by President Pedro Castillo boosted investor
    The sol, which is set to add more than 4% this week, has
posted a six-day winning streak since Castillo named more
moderate officials to his cabinet, calming fears over
market-unfriendly policy reforms.
    Chile's peso fell as much as 0.8% to 831.9 to the
dollar on Friday, its weakest since May 2020 after opposition
lawmakers launched impeachment proceedings against President
Sebastian Pinera over possible irregularities in the sale of a
mining company.
    The controversy, sparked by new details on the deal in the
Pandora Papers leak, comes ahead of presidential and legislative
elections in November.
    A sharp interest rate hike by the central bank earlier this
week gave the peso temporary relief, as inflation also heats up
in the country, but it was set to end the week in the red.
    Most other Latin American currencies were muted on Friday. 
    Brazil's real rose 0.7% after central bank
international affairs and corporate risks director Fernanda
Guardado said the bank sees 12-month inflation peaking between
this month and last month before subsiding towards the official
    Guardado added that steeper interest rate hikes were not off
the table but the bank was convinced that its current pace of
100 basis points at each policy meeting would bring inflation
back to target next year. 
    Analysts shared the central bank's view on inflation having
peaked, but were skeptical over the short-term outlook. 
    "Although inflation will likely ease in the coming months,
we continue to expect an unfavourable outlook for H1/22. Against
this backdrop, Banco Central will continue its tightening cycle,
with rates reaching 9% in February 2022," analysts at TS Lombard
wrote in a note.
    Rate hikes have somewhat helped the real through volatile
market conditions bought about by concerns over inflation and
stretched fiscal spending. 
    Other Latin American economies have also been struggling
with a spike in inflation, with rising oil prices adding to the
    Key Latin American stock indexes and currencies:
                              Latest    Daily % change
 MSCI Emerging Markets         1281.86             1.2
 MSCI LatAm                    2268.97            1.01
 Brazil Bovespa              113361.26            0.16
 Mexico IPC                   52283.81            0.28
 Chile IPSA                    4037.37            1.02
 Argentina MerVal                 0.00               0
 Colombia COLCAP               1416.05           -0.04 Currencies             Latest    Daily % change
 Brazil real                    5.4768            0.70
 Mexico peso                   20.5352            0.02
 Chile peso                      828.9           -0.40
 Colombia peso                 3772.53           -0.15
 Peru sol                       3.9094            0.22
 Argentina peso                99.1800           -0.02

 (Reporting by Ambar Warrick; Editing by Kirsten Donovan)