EMERGING MARKETS-LatAm FX, stocks climb as yen intervention jitters weaken dollar

By Purvi Agarwal

Jan 26 (Reuters) - Latin American stocks and currencies were broadly higher on Monday, capitalizing on a weaker dollar after risks of government intervention in the Japanese yen sent the currency soaring.

The yen JPY= gained 1.2% against the U.S. dollar, after sharp spikes on Friday prompted speculation over potential intervention. The New York Federal Reserve conducted rate checks on Friday, sources told Reuters, raising the chance of joint U.S.-Japan intervention.

The dollar index =USD slipped 0.2%, while most LatAm currencies gained, with MSCI's index .MILA00000CUS adding 0.5%, after logging its sixth week of gains on Friday.

Analysts at Morgan Stanley believe that the Bank of Japan's focus is on inflation and growth fundamentals but, "domestic pressure from a rapidly weakening currency can never be ignored."

"The sharp reversal in the yen added an extra twist, as FX positions were directly affected, and there was a market narrative about how coordinated any intervention might have been," they said.

UBS strategists expect volatility in the FX space until Japan's February 8 elections.

Meanwhile, Ukraine's bonds, which had slipped over 1 cent in the previous session, rebounded, with the one maturing in 2035 XS2895056369=TE up 1.6 cents on the dollar, after a U.S. official said more discussions between the U.S., Russia and Ukraine were expected in Abu Dhabi the coming Sunday.

Russia's rouble RUB= slipped 1.3% against the dollar, over-the-counter market data showed.

However, territorial issues remain key for Russia in the peace talks, even as Ukraine said that a U.S. document on security guarantees was completely ready.

Back in LatAm, Brazil's real BRL= gained 0.4%, while stocks .BVSP shed 0.3%. Data showed Brazil's current account deficit ended 2025 broadly in line with the previous year, reversing a deterioration seen earlier in the year.

Mexico's peso MXN= jumped 0.6%, the most among peers, to its highest level in over a year, while local stocks .MXX advanced 1.4%.

The currencies were down about 0.7% each against the Japanese yen.

Chile's peso CLP= advanced 0.4% against the dollar. The rise was partially helped by copper prices that rose to an over-one-week high. The country's equities .SPIPSA, gained 0.8%.

MSCI's index tracking stocks in Latin America .MILA00000PUS advanced 1.1% to a record high, on track for its sixth session of gains.

Both MSCI's indexes tracking assets in LatAm logged gains last week after U.S. President Donald Trump walked backed his tariff threats to Europe over Greenland and ruled out acquiring the territory by force, allaying some geopolitical uncertainty.

Surging commodity prices also helped lift stocks in resource-rich countries in Latin America last week.

Conversely, Colombia's peso COP= fell 1.1% in low trading volumes, extending its 1% decline from the previous session.

Key Latin American stock indexes and currencies: