* Colombia central bank holds interest rates steady * Peru"s Castillo wants to keep central bank head * Mexico"s Salinas says his Banco Azteca may embrace bitcoin (Adds market analyst, updates prices) By Susan Mathew and Ambar Warrick June 28 (Reuters) - Peru"s sol rose sharply from near record lows on Monday as socialist presidential candidate Pedro Castillo assuaged some fears over radical policy changes, while Colombia"s peso rose after the central bank held rates, as expected. The sol jumped 2.5% after Castillo said he would keep on the head of the central bank if he was confirmed the winner of a June 6 election. The sol has lost 9% since Castillo won the first round vote in April, and has been trading around record lows as investors fear sweeping reforms in the mining industry in the world"s second-biggest producer of copper. The Colombian peso rose 0.7% and was set for its best day in more than three weeks, after the central bank held interest rates as part of an expansive monetary policy to tide the country through the COVID-19 pandemic. But analysts said the Colombian bank could follow its regional peers into hawkish territory. The central banks of Brazil and Mexico, the two biggest economies in Latin America, recently raised interest rates and signaled more rate hikes were on the way as they attempt to stem rising inflation. Chile"s central bank also mulled hikes in its June meeting, minutes showed. "Colombia may soon join this club," said Nikhil Sanghani, an emerging markets economist with Capital Economics. "While the region appears to be on the brink of a broader tightening cycle, in general we think that the upward revision to investors" rate expectations has gone too far," he said. The hawkish moves have helped Latin American currencies mark stronger year-to-date gains than their broader emerging market peers. Most other Latin American currencies made small moves on Monday. The dollar traded little changed, awaiting U.S. payrolls data later in the week. Brazil"s real rose 0.1%. The Brazilian central bank"s weekly survey showed a 12th consecutive weekly rise in inflation forecasts for this year to 5.97%, more than two percentage points above the bank"s year-end goal of 3.75%. Meanwhile, Brazil is making progress on studies into launching a digital currency, but there are several challenges to overcome, including technology and the difficulty in ensuring uniformity across the world, central bank chief Roberto Campos Neto said on Friday. In Mexico, billionaire Ricardo Salinas Pliego said his banking business, Banco Azteca, may begin using bitcoin, which would make it the country"s first bank to start accepting the cryptocurrency. Chilean markets were closed for a holiday. Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1380.43 0.06 MSCI LatAm 2660.06 -0.16 Brazil Bovespa 127063.56 -0.15 Mexico IPC 50217.20 -0.66 Argentina MerVal 64620.07 -0.788 Colombia COLCAP 1269.73 -1.13 Currencies Latest Daily % change Brazil real 4.9309 0.09 Mexico peso 19.8038 0.03 Chile peso 733.75 -0.16 Colombia peso 3715.31 0.72 Peru sol 3.8838 2.47 Argentina peso 95.6800 -0.07 (interbank) (Reporting by Susan Mathew and Ambar Warrick in Bengaluru Editing by Paul Simao and Grant McCool) Our Standards: The Thomson Reuters Trust Principles.