EMERGING MARKETS-Latam forex drops as US Fed hints at no rush to cut rates

By Shashwat Chauhan

March 20 (Reuters) - Most Latin American currencies weakened on Thursday, as the dollar firmed after the U.S. Federal Reserve said it was in no rush to cut interest rates, while also flagging U.S. growth concerns.

Fed Chair Jerome Powell said on Wednesday the Trump administration's initial policies, including extensive import tariffs, appear to have tilted the U.S. economy toward slower growth and at least temporarily higher inflation.

In explaining why rates were being kept unchanged, Powell described the uncertainty faced by Fed policymakers as "unusually elevated."

"Beyond the mechanical impact of higher tariffs, the adverse effects of heightened uncertainty have triggered worries about a near-term slowdown or even a recession (in the United States)," Deutsche Bank analysts said.

Still, Fed policymakers still expect the central bank to deliver two quarter-percentage-point rate cuts by the end of this year, matching their projection in December.

Brazil's real BRL= weakened 0.3%, in line with the global dollar strength, overshadowing the central bank's decision to raise interest rates by 100 basis points for the third consecutive time, sticking to previous guidance, and signaling a smaller rate hike at its next policy meeting.

"The Copom is still far from having won the battle against inflation. As such, it should not put too much weight on the domestic growth dynamics and global uncertainty," Goldman Sachs analysts said in a note.

Mexico's peso MXN= weakened 0.6%, briefly hitting its lowest level in over a week, while Colombia's peso COP= dropped 0.8%, hitting its lowest in over six weeks earlier in the session.

Colombian President Gustavo Petro has tapped German Avila Plazas as the country's new finance minister, a source told Reuters, after the former minister Diego Guevara announced his resignation amid clashes over budget cuts.

News of Guevara stepping down earlier this week had sent the peso down more than 1% against the dollar.

In Mexico, preliminary estimates showed that Latin America's second biggest economy likely fell 0.7% in February from the same month a year earlier.

Swept up in the global dollar domination, Chile's peso CLP= also shed almost 1%, set to snap a five-day winning streak.

The broader gauge of Latin American currencies .MILA00000CUS slipped 0.5%, while stocks .MILA00000PUS fell 0.7%.

Brazil's Bovespa .BVSP slipped 0.2%, bogged down by losses in industrials and utilities, and was set for its first single-day decline in seven.

Elsewhere, South Africa's rand ZAR= remained under pressure, down 0.6% despite the country's central bank pausing its rate-cutting cycle.

Turkey's lira TRYTOM=D3 appreciated 0.2% after hitting a record low of 42 in the last session after the country's central bank hiked its overnight lending rate to 46% in an interim monetary policy committee meeting.

Turkish assets were hit hard on Wednesday after authorities detained President Tayyip Erdogan's main political rival.

In Venezuela, a report from the Wall Street Journal stated that U.S. President Donald Trump's administration is considering a plan to extend Chevron's CVX.N license to pump oil in the country.

HIGHLIGHTS

Brazil's Minerva vows to cut debt after paying for large acquisition

Brazil's Haddad says recession not needed to bring inflation down

Mexico's northern state to receive $3.7 billion investments, minister says

Key Latin American stock indexes and currencies: