EMERGING MARKETS-Latam FX gain as Trump mulls Fed chair replacement, stocks higher

By Ragini Mathur and Purvi Agarwal

June 26 (Reuters) - Most Latin American currencies edged higher on Thursday as the dollar tumbled after U.S. President Donald Trump's latest comments on the Federal Reserve chair, while stocks jumped in the aftermath of the Iran-Israel ceasefire.

According to a Wall Street Journal report, Trump had toyed with the idea of announcing Fed Chair Jerome Powell's replacement by September or October.

"This has led to speculation U.S. interest-rate cuts may come sooner and go further than currently priced into markets, and the dollar has taken a dip," said Fawad Razaqzada, market analyst at City Index.

The dollar index =USD, which tracks the greenback against a basket of major currencies, slipped to multi-year lows on concerns about the future independence of the Fed, and a potential tilt to a dovish monetary policy.

This strengthened Latin American currencies against the dollar, with Brazil's real BRL= gaining 0.9%, the most against peers.

Brazilian inflation slowed more than expected in early June, data showed. Central bank policymakers also trimmed their inflation forecasts for 2026, projecting price pressures near the official goal by the end of 2027.

Brazil's Congress on Wednesday overturned a decree that raised the financial transactions tax on certain credit, foreign-exchange and private pension plan operations, to which the government is now seeking options.

The country's fiscal discipline had steered investors away in the past, and led to the central bank commencing a rate hiking cycle, with rates now near a two-decade high of 15%.

BofA Global Research sees Brazil cutting rates in its December meeting, versus market consensus for a first cut in January, citing limited impact from U.S. trade policies.

Mexico's peso MXN= was flat ahead of a local central bank decision, where it is widely expected to deliver a half percentage-point cut.

Argentina is also awaiting an interest rate decision this week. Its currency ARS= was up 0.6%.

Chile's peso CLP= gained 0.6%, tracking copper prices that were around three-month highs. MET/L

MSCI's index for Latin American currencies .MILA00000CUS was up 0.4%, while the stocks gauge .MILA00000PUS added 0.9%.

Heavyweight Brazilian stocks .BVSP gained 0.8%, while Mexico's bourse .MXX lagged by 0.3%. Chile's .SPIPSA was 0.7% higher.

Market sentiment was also lifted by a halt in hostilities between Israel and Iran, who agreed a ceasefire on Tuesday, ending a 12-day long war that had unsettled markets, mainly ones in the Middle East.

Some caution still lingers as Iran's Supreme Leader said the country would respond to any future U.S. attack by striking American military bases in the Middle East.

Stocks in Israel .TA125 closed 0.7% lower, and ones in Turkey .XU100 were down 0.8%.

Israel's shekel ILS= was flat, while Turkey's lira TRYTOM=D3 was little changed.

Key Latin American stock indexes and currencies around 1435 GMT: