By Ankita Yadav and Ragini Mathur
Latin American currencies were mixed, while stocks broadly rose on Tuesday, as investors monitored regional developments ahead of the looming U.S. tariff deadline and central bank meetings scheduled for this week.
On Monday, U.S. President Donald Trump said that countries failing to negotiate separate trade deals with the United States would soon face tariffs ranging from 15% to 20%, surpassing the 10% base rate floated in April.
Developing economies, including Brazil, Mexico, India and South Africa, are scurrying to clinch deals with the U.S. to escape the sweeping duties that have clouded the outlook for markets that have done well this year.
In another potentially significant development, U.S. Commerce Secretary Howard Lutnick said natural resources not grown domestically, including coffee and cocoa, could receive tariff exemptions once trade deals are struck with producing countries.
However, he offered no clarity on imports from nations without U.S. agreements, such as Brazil.
Brazil supplies a third of the coffee used in the U.S. and that trade could be heavily impacted if 50% tariffs are indeed imposed.
Brazilian real FX_IDC:USDBRL was 0.3% higher in the day after three straight sessions of losses. The government has asked the U.S. to exclude food products and Embraer's BMFBOVESPA:EMBR3 aircraft from duties, a source familiar with the matter told Reuters.
The Bovespa index BMFBOVESPA:IBOV gained 0.5%, with Embraer up 4.1%
On the flip side, Chilean peso FX_IDC:USDCOP was down 0.3%, ahead of a local interest rate decision where economists expect the central bank to cut its key rate by 25 basis points to 4.75%.
"The most important factor in Chile is that the central bank probably will anticipate an additional rate cut later this year and also into 2026 with the rates reaching neutral level," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.
"I have to say that there is a lot of uncertainty in the outlook for the country, as U.S. tariffs risk potential slower growth in Chile, which is a relatively open economy."
Crude producer Colombia's peso FX_IDC:USDCOP gained 0.9% tracking oil prices that advanced for a second consecutive day, while Mexico's peso FX_IDC:USDMXN was flat.
Among equities, MSCI's Latam equities index (.MILA00000PUS) edged up 0.7%. Mexican stocks BMV:ME added 1.3%, boosted by a 2.6% jump in Grupo Mexico BMV:GMEXICO/B after the mining and transportation conglomerate reported a 10% jump in quarterly net profit.
Argentina's Merval index BCBA:IMV jumped 4% to its highest level in eight weeks, boosted by energy giant YPF BCBA:YPDCB.
The International Monetary Fund raised its outlook for economic growth across emerging markets for this year to 4.1% from 3.7%, driven by front-loading and a more upbeat view on China.
However, the organization warned that additional tariffs on Brazil would lead to a steeper slowdown in activity than currently projected.
Meanwhile, an index tracking the premium to hold emerging market corporate debt fell below 250 basis points, their lowest levels since before the 2008 financial crisis, as investors lapped up a recent flurry of issuance, reflecting increased confidence in their ability to repay debt.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters
Equities
Latest
Daily % change
MSCI Emerging Markets CBOE:EFS
1252.55
-0.23
MSCI LatAm (.MILA00000PUS)
2245.13
0.70
Brazil Bovespa BMFBOVESPA:IBOV
132825.64
0.53
Mexico IPC BMV:ME
57825.4
1.3
Chile IPSA BCS:SP_IPSA
8122.54
0.6
Argentina Merval BCBA:IMV
2302123.98
4
Colombia COLCAP BVC:ICAP
1757.87
-0.26
Currencies
Latest
Daily % change
Brazil real FX_IDC:USDBRL
5.5722
0.29
Mexico peso FX_IDC:USDMXN
18.7509
-0.03
Chile peso FX_IDC:USDCLP
970.88
-0.34
Colombia peso FX_IDC:USDCOP
4140
0.89
Peru sol FX_IDC:USDPEN
3.55
-0.2
Argentina peso (interbank) FX_IDC:USDARS
1290
0.39
Argentina peso (parallel) (ARSB=)
1300
1.52