EMERGING MARKETS-Currencies deepen losses ahead of Fed minutes

* S.African rand slides 1.8% as retail sales declines * Fed minutes due at 1800 GMT (2 p.m. ET) * Latam FX slide sharply, BRL down 0.7%, COP slides 1.2% By Susan Mathew Aug 17 (Reuters) - South Africa's rand deepened losses on Wednesday, hit by falling retail sales, while Latin American currencies fell heavily as the dollar inched up ahead of minutes from the U.S. Federal Reserve's last policy meeting. The rand fell almost 2% after data showed South African retail sales fell 2.5% year on year in June after rising by 0.1% in May. The rand was last seen at 16.66 to the dollar, set for its steepest one-day decline in two weeks. "The hard activity data out of South Africa for June suggest that the economy contracted by around 1.0% quarter-on-quarter in the second quarter, and we think that activity will remain weak in the coming quarters too," said Virag Forizs, Africa economist at Capital Economics. The dollar was up 0.1% ahead of Fed minutes due at 2:00 p.m. ET (1800 GMT). Investors will look for clues on the size of the Fed's next interest rate hike. Bets for a third 75 basis points (bps) hike fell after softer-than-expected U.S. inflation data last week. Traders are now more-or-less split between the probability of a 50 bps and 75 bps move. Brazil's real was down 0.7%. Data as measured by the IGP-10 price index showed inflation in Brazil fell 0.69% in August, compared to a 0.60% gain in July. Brazil's central bank has hiked interest rates aggressively to tame inflation, raising them to 13.75% from a record low of 2% in March 2021. Meanwhile, the two leading candidates in presidential elections due in October, leftist former president Luiz Inacio Lula da Silva and far-right president Jair Bolsonaro, began their campaigns on Tuesday. "Brazil's fiscal outlook remains fragile, as the South American country's gross debt is currently around 20 percentage points higher than peers in LatAm or EMs in the G20", said Mauricio Une, head of South America macro strategy at Rabobank. "Whoever wins the election will still have to deliver reforms so Brazil's debt can converge down towards the level of peers over the next years." The real has fallen every year till last year since Bolsonaro took office in 2018. During Lula's term between 2003-2010, the real gained every year except 2008, when markets were roiled by the global financial crisis. Mexico's peso slipped 0.6%, set for its worst session in two weeks, while Colombia's peso slumped 1.2%, extending Tuesday's 2.2% slide. Easing copper prices weighed on Chile's peso. Chile is the world's biggest producer of the red metal. Key Latin American stock indexes and currencies at 1420 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1015.34 0.11 MSCI LatAm 2230.77 -0.75 Brazil Bovespa 113285.39 -0.2 Mexico IPC 48784.42 -0.04 Chile IPSA 5399.49 0.24 Argentina MerVal - - Colombia COLCAP 1323.26 0.14 Currencies Latest Daily % change Brazil real 5.1781 -0.74 Mexico peso 20.0450 -0.74 Chile peso 889.4 -0.96 Colombia peso 4297.54 -1.14 Peru sol 3.8458 -0.13 Argentina peso 135.5400 -0.15 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Mark Potter)