EMERGING MARKETS-Latam FX on cusp of record high amid US-China trade talk hopes

By Nikhil Sharma and Pranav Kashyap

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

MSCI's index for Latin American currencies .MILA00000CUS ticked up 0.8%, flirting with the record high achieved back in July 2011.

The move was helped by a softer U.S. dollar =USD, which eased its grip as top officials from Washington and Beijing converged in London — aimed at defusing the escalating trade tensions between the world's 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.

This protracted instability has undeniably bludgeoned confidence in U.S. assets, especially the greenback, compelling investors to seek better investments in emerging markets.

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

High-yielding currencies like the Brazilian real BRL= have emerged as prime beneficiaries — having already jumped 10% so far in 2025.

On Monday, the real took a backseat, dipped marginally, after closing out its strongest week in over 10 months on Friday. This pullback could mark the end of a five-session winning streak — its longest in over four months — influenced by a dip in iron ore prices, a critical export for the South American giant.

Sao Paulo's main stock index .BVSP pared losses and was last down 0.1%.

Additionally, a gauge of the region's equities .MILA00000PUS rose 0.3%.

Mexico's peso MXN= gained 0.3% — set for its fourth consecutive session of advances and its longest winning streak in a month. However, new data revealed that annual inflation in May accelerated beyond the central bank's target, potentially complicating its monetary easing ambitions.

The nation's equity index .MXX retreated 0.2%.

Colombia's peso COP=, however, bucked the regional trend, as it slid 0.7%, and its main stock index COLCAP .COLCAP dipped nearly 1%. Investors are awaiting May's inflation figures, widely expected to show easing price pressures.

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

Compounding the unease, mounting fiscal concerns intensified after Finance Minister German Avila's Friday comments signaled a potential breach of the nation's carefully guarded fiscal rules.

Chile's peso CLP= dipped 0.2%. 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 was flat.

Elsewhere, Peru's sol PEN= slipped 0.5% as investors awaited an interest rate verdict due later this week.

Key Latin American stock indexes and currencies: