EMERGING MARKETS-Latam FX gains on weak dollar, stocks jump as risk sentiment improves

By Purvi Agarwal

Jan 27 (Reuters) - Latin American currencies and stocks gained on Tuesday, as the dollar weakened and risk appetite improved globally, while Brazilian assets advanced after a regional inflation reading.

MSCI's index tracking Latam currencies .MILA00000CUS was up 0.3%, putting it on track for a seventh consecutive session of gains, its longest winning streak since late November.

Traders are on alert for potential coordinated intervention by authorities in the U.S. and Japan in the Japanese yen, that lifted the currency on Monday. The dollar index =USD fell 0.8% in its fourth session of declines.

The U.S. Federal Reserve will also commence its two-day meeting, with a decision scheduled on Wednesday, that could set the tone for global markets this week.

Brazil's real BRL= gained 0.7% to its highest level since June 2024, while stocks in Latin America's biggest economy climbed 2.2%, racing past 182,000 points for the first time.

Government data showed Brazil's annual inflation ticked up in early January but came in broadly in line with expectations ahead of the central bank's interest rate decision later this week.

The data supports the government's fight against sticky inflation in the economy that has kept interest rates at 15%, the highest in nearly two decades.

"This reading reinforces our perception that the bulk of the deflationary pressure coming from tradable goods is already past us," said a group of analysts at Citigroup, led by Ernesto Revilla.

"...Suggesting that the softening of inflation will become much more linked, from now on, to components that linked to the domestic economic cycle.,"

Chile's peso CLP= advanced 0.4%, set to extend its rally to a sixth session. Local stocks .SPIPSA gained 1% ahead of a monetary policy decision where the central bank is widely expected to hold interest rates.

Mexico's peso MXN= also appreciated 0.4% with its stocks .MXX little changed.

MSCI's stocks gauge for the region .MILA00000PUS surged 1.3% in its seventh session in the positive, set for its longest streak since April last year.

Elsewhere in EMs, Ukraine's bonds stabilized after gaining over 1 cent on the dollar broadly in the previous session, with many instruments at their highest level since the bonds were restructured last year.

Financial Times reported that U.S. President Donald Trump's administration signaled that U.S. security guarantees for Ukraine depend on Kyiv agreeing to a peace deal likely requiring it to cede the Donbas region to Russia.

Moody's Ratings, on Monday, upgraded its rating on Ecuador to 'CAA1' from 'CAA3', hours after the country launched a $4 billion international debt sale.

MSCI said it would "consult" on a reclassification of Greece to the developed markets status, with analysts at J.P.Morgan estimating the move in late-August.

Hungary's central bank kept rates on hold and said maintaining tight monetary conditions and a patient approach to policy was warranted.

Key Latin American stock indexes and currencies: