EMERGING MARKETS-Latam FX approaches record peak with Sino-US talks in focus

By Nikhil Sharma

June 9 (Reuters) - An index tracking Latin American currencies inched closer to a record high on Monday, as investors anticipated a potential breakthrough in U.S.-China trade negotiations.

MSCI's index for Latin American currencies .MILA00000CUS leapt 0.5% to trade near a record high hit in July 2011.

The move was helped by a softer U.S. dollar =USD, which eased as top officials from Washington and Beijing met in London to try to defuse tensions between the two economic powerhouses.

The talks aim to revive a preliminary agreement struck last month, which had briefly relieved investors after weeks of uncertainty unleashed by U.S. President Donald Trump's tariff policies since his inauguration in January 2025.

The instability has bludgeoned confidence in U.S. assets, especially the dollar, pushing investors to seek better returns in emerging markets.

"The USD weakness is clearly helpful for all who manage their currencies vs the USD. The tighter that management, the more the benefit," said Rob Brewis, portfolio manager at Aubrey Capital Management.

High-yielding currencies such as the Brazilian real BRL= have drawn heavy inflows from the U.S. this year. The real has soared about 10% so far in 2025.

On Monday, the real was down 0.4%, influenced by lower iron ore prices, with Brazil being a major exporter of the commodity.

Sao Paulo's main stock index .BVSP dropped more than 1%, heading for its eighth decline in the last nine trading sessions.

Dragging down the index was heavyweight oil firm Petrobras PETR4.SA, which fell 2.3% to a more than one-month low, while a similar drop for lender Bradesco BBDC4.SA also weighed.

Additionally, a gauge of the region's equities .MILA00000PUS fell 0.4%.

In Mexico, the peso MXN= edged up 0.2% in cautious trading after the country's annual inflation rate accelerated in May to breach the central bank's target range, adding a stumbling block to its policy easing cycle.

The local equity index .MXX was down 0.3%.

Colombia's peso COP= fell 0.7%, while the main stock index COLCAP .COLCAP dipped 0.1% ahead of the nation's May inflation numbers, which are likely to show a moderation in price pressures.

Colombia was thrown into political turmoil after Senator Miguel Uribe, a potential presidential contender, survived an assassination attempt after getting shot in the head during a campaign event on Saturday.

Fiscal woes were also clouding the economy, with Finance Minister German Avila's statement on Friday hinting at a possible deviation from compliance with fiscal rules.

Chile's peso CLP= was steady after data revealed that copper exports from the world's biggest producer of the red metal rose 4.4% year-on-year in May.

The Santiago stock index .SPIPSA added 0.1%.

Elsewhere, Peru's sol PEN= was largely unchanged against the dollar as investors awaited an interest rate verdict due later this week.

Key Latin American stock indexes and currencies: