EMERGING MARKETS-Latam FX, stocks shrug off US tariffs; Mexican peso down as cenbank cuts rates

By Sukriti Gupta, Purvi Agarwal and Ragini Mathur

Aug 7 (Reuters) - Latin American currencies and stocks rose on Thursday as investors brushed aside concerns over U.S. tariffs, while the Mexican peso slipped after the Bank of Mexico delivered a widely expected 25-basis-point interest rate cut.

U.S. President Donald Trump's higher tariffs on imports from dozens of countries took effect on Thursday, following weeks of uncertainty and intense negotiations.

Brazilian exports to the U.S. face the steepest tariffs, with some goods now taxed at 50%, while tariffs on goods from India are expected to rise to the same level.

The BRICS group of countries, comprising Brazil, Russia, India, China and South Africa, has come under greater scrutiny from Trump, who accused them of pursuing 'anti-American policies'.

Indian Prime Minister Narendra Modi and Brazil's President Luiz Inacio Lula da Silva spoke by phone on Thursday, a day after the Brazilian leader told Reuters he would initiate discussions within the group on addressing Trump's tariffs.

Brazil's currency BRL= hit a near one-month high, rising 0.7%. Meanwhile, the country's stocks .BVSP jumped 1.7% to their highest level in more than two weeks, with analysts noting that tariff exemptions secured last week could soften the impact of U.S. duties.

In contrast, Mexico's peso MXN= extended its declines, last down 0.3%, while its stocks .MXX climbed 1.8% to their highest level in a month.

The gains came as the Bank of Mexico lowered its benchmark interest rate, though at a slower pace, bringing the rate to 7.75%, its lowest level in three years.

Data earlier in the day showed Mexico's headline inflation slowed in July to its lowest level since late 2020, though the closely-watched core rate remained above the central bank's official target.

"Core inflation remains relatively sticky, particularly services inflation, so that means that the central bank will be able to cut rates, but only at a gradual pace," said Andrés Abadía, chief Latam economist at Pantheon Macroeconomics.

"There is uncertainty about what will happen to tariffs after the 90-day pause and that forces the central bank to be a little bit more cautious."

More broadly, MSCI's Latam currency gauge .MILA00000CUS rose 2.2%, with other regional currencies trading higher against the U.S. dollar.

The dollar index =USD was marginally higher after a report said U.S. Federal Reserve Governor Christopher Waller emerged as a favorite for the next Fed Chair, who analysts say is respected in financial markets.

Equities in most developing markets, particularly in Asia rose after Trump exempted chip firms manufacturing in the United States, or ones that committed to do so, from his sweeping tariffs.

MSCI's index tracking Latam stocks .MILA00000PUS advanced 2.1%, hitting its highest in two weeks and on course for a fourth session of gains.

Shares in Chile .SPIPSA were up 1.2%, with miner SQM SQMA.SN gaining 4%, tracking higher copper prices.

Elsewhere, the Kremlin said President Vladimir Putin and Trump will meet in the coming days, as Trump seeks a breakthrough to end the Ukraine war.

Russia's rouble RUB= strengthened 0.9%, over-the-counter market data showed, while Moscow stocks jumped. Ukrainian dollar bonds rallied, broadly up near 3 cents on the dollar each, following the announcement.

Key Latin American stock indexes and currencies: