Peru's sol in debate as the Central Bank says inflation would likely peak this month Chile's peso hit by political uncertainty Brazil inflation outlook in doubt By Ambar Warrick Oct 15 Reuters -- Chile's peso dropped 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. Pedro Castillo posted this week the largest gainer in Latin America, set for its best week in more than 30 years as a moderate turn by President Peru boosted investor optimism. The sol, set to add more than 4% this week, has posted a six-day winning streak since Castillo appointed more moderate officials to his cabinet, calming fears over market unfriendly policy reforms. On Friday, Chile's yuan fell as much as 0.8% to 831.9 against the dollar, 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. A short-term interest rate hike by the central bank earlier this week gave peso temporary relief as inflation also heats up in the country, but it was decided to end the week in the red. On Friday, Latin American currencies were dropped. Brazil's real value rose 0.7% after foreign 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 target. 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 views on inflation having peaked, but were skeptical over the short term outlook. Although inflation may ease in the next few months, we continue to expect an unfavourable outlook for H 1 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 fiscal spending. Other Latin American economies have also been affected by a spike in inflation, with rising oil prices adding to the pressure.