EMERGING MARKETS-Latam currencies down as tariff uncertainty lingers

By Shashwat Chauhan

March 26 (Reuters) - Most Latin American currencies slipped on Wednesday, as investors exercised caution and looked out for more developments on the U.S. tariff front, while regional stocks were mixed.

Global markets got a boost this week as U.S. President Donald Trump indicated that not all of his threatened levies would be imposed on April 2 and that some countries may get breaks. However, he remained firm on automobile tariffs.

Uncertainty remains front and center ahead of the April 2 deadline, as Trump issued an executive order on Monday declaring that any country buying oil or gas from Venezuela will pay a 25% tariff on trades with the U.S.

Brazil's real BRL= was amongst top losers, down 0.5% after a more than 1% jump in the last session, while Mexico's peso MXN= also depreciated 0.5%.

Investors were also assessing data released by Brazil's central bank which showed Brazil's foreign direct investment (FDI) far exceeded expectations in February, improving the country's 12-month inflows while its current account deficit worsened on the same metric.

In Mexico, a central bank decision is on the cards this week, with the majority of economists polled by Reuters expecting the Bank of Mexico to cut its benchmark lending rate by 50 basis points, taking it to 9%.

Latin American currencies have benefited of late from a weakening dollar as markets have broadly begun to question the case of U.S. exceptionalism when it comes to growth, as the uncertainty over Trump's tariffs and other policies has raised concern the world's biggest economy could see a downturn.

"Caution is warranted in EM FX, as currencies tend to weaken in U.S. slowdowns, which affects overall risk appetite," Barclays analysts said in a note.

Brazil's real remains one of the best emerging market currencies so far, only trailing Hungary's forint HUF=. MSCI's index for Latin American currencies .MILA00000CUS dipped 0.6% on Wednesday, though remained more than 9% up on a year-to-date basis.

Regional stocks were mixed, with Brazil's Bovespa .BVSP adding 0.3%, boosted by rising energy stocks. The Mexican bourse .MXX, meanwhile, dipped 0.3%.

Latin American stocks too have seen robust gains, with an index tracking regional equities .MILA00000PUS up almost 14% so far in 2025.

In Argentina, the International Monetary Fund said late on Tuesday that discussions with the country on a new program are "advanced," and that fund staff and its board have also met as part of the program's proceedings.

Elsewhere in emerging markets, the Czech National Bank (CNB) left interest rates unchanged as expected at 3.75%, pausing a more than year-long easing campaign for a second time.

Ukraine's international bonds were a touch higher after the United States reached separate deals on Tuesday with Ukraine and Russia to pause their attacks at sea and against energy targets, though both accused one another on Wednesday of flouting the truce.

HIGHLIGHTS

Kenya targets sustainable debt cuts amid IMF programme uncertainty

Mozambique central bank cuts MIMO rate to 11.75%

Mercosur eyes trade talks with Japan this year, says Brazil's Lula

Key Latin American stock indexes and currencies: