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* Colombia central bank board chief defends forex policy * South Africa raises main lending rate more than forecast * Turkish cenbank holds rate at 14% despite near-80% inflation (Updates prices) By Anisha Sircar and Devik Jain July 21 (Reuters) - Latin American currencies fell on Thursday, with Colombia's peso leading the declines, while South Africa's rand rose against the dollar after a larger-than-expected rate hike by the central bank. Colombia's currency fell 1.6% to 4,414.8 to the dollar after central bank board chief Leonardo Villar defended the monetary policy authority's decision not to intervene in movements of the peso, even as market volatility pushed other central banks in the region to take action. A fall in prices of oil, Colombia's top export, also weighed on the currency. Mexico's peso also slipped, falling 0.5%. Copper exporter Chile's peso weakened by 0.6% as metal prices slipped on recession fears. Last week the Central Bank of Chile announced a $25 billion intervention to buoy the currency after it hit a series of historic lows. After enjoying a strong rally in the first half of 2022, emerging market assets have been rattled with Latin American currencies down 3.2% so far in July owing to a stronger dollar and softening commodity prices on mounting fears of a global recession. "The initial fallout from Russia's invasion of Ukraine was positive for many EM commodity exporters, but mounting global recession fears are now running this channel in reverse ... causing currency weakness and capital outflows across EM," economists at the International Institute of Finance wrote in a note. "We do not think that this shock poses a systemic risk for much of EM, because most countries have learned – as they demonstrated during the first COVID wave in 2020 – that currency depreciation is an important shock absorber." However, dollar strength combined with weakness in a country's currency translates into higher import bills, which accelerates inflation. While emerging markets started their monetary policy tightening cycles well before developed peers, inflation has consistently exceeded expectations in those countries. South Africa's rand gained 0.6% against the dollar on Thursday after the central bank hiked its main lending rate by 75 basis points, its biggest rise since 2002 to tame inflation running at a 13-year high. Turkey's lira continued to hover near December lows, last trading at 17.71 to the dollar, after its central bank held its policy rate at 14% for a seventh straight month despite near-80% inflation. Meanwhile, central and eastern European currencies were hit by a stronger euro following the European Central Bank's first rate rise in over a decade. Elsewhere in the region, Brazil's former President Luiz Inacio Lula da Silva was officially nominated by his Workers Party (PT) to run on Oct. 2 against far-right incumbent President Jair Bolsonaro in Brazil's most polarized election in decades. Key Latin American stock indexes and currencies at 1911 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 989.84 0.33 MSCI LatAm 1964.37 -0.71 Brazil Bovespa 98501.13 0.22 Mexico IPC 47135.23 0.01 Chile IPSA 5171.75 0.5 Argentina MerVal 112377.67 5.076 Colombia COLCAP 1289.31 -1.05 Currencies Latest Daily % change Brazil real 5.4975 -0.69 Mexico peso 20.6631 -0.63 Chile peso 929.5 -0.39 Colombia peso 4414.8 -1.60 Peru sol 3.9042 -0.69 Argentina peso (interbank) 129.5900 -0.15 Argentina peso (parallel) 332 -4.52 (Reporting by Anisha Sircar and Devik Jain in Bengaluru; Editing by Mark Potter and Jonathan Oatis)