EMERGING MARKETS-Latam FX gains, stocks supported by commodities as dollar lift fades

By Purvi Agarwal

Jan 29 (Reuters) - Most Latin American currencies strengthened against the U.S. dollar on Thursday as mildly hawkish comments from the Federal Reserve did little to support the greenback, while stocks continued to climb on stronger commodity prices.

MSCI's index tracking Latam currencies .MILA00000CUS gained 0.5%, set for its ninth session in positive territory.

The Fed kept rates unchanged as expected on Wednesday, with Chair Jerome Powell describing a solid economy and diminished risks to inflation and employment, which could signal a lengthy wait before any further cuts in borrowing costs.

Still, they provided little support to the dollar index =USD, which was trading flat.

COPPER PRICE CLIMB LIFTS CHILE'S PESO

Chile's peso CLP= gained the most among peers, up 1.3% to its highest level in more than two years. The rise in the currency of the world's largest copper producer was aided partly by the price of the red metal that passed $14,000 a metric ton. MET/L

Stocks .SPIPSA in the country were 0.2% higher.

Data showed the unemployment rate in Chile hit 8.0% in the quarter through December, below the 8.3% expected by economists polled by Reuters.

Brazil's real BRL= gained 0.3%. The country's central bank on Wednesday held interest rates steady at a near two-decade-high of 15% but signaled it would start cutting at its next meeting in March, a move Finance Minister Fernando Haddad said will help put public debt on a better trajectory.

"Brazil and Mexico could still benefit from their deep easing cycles. In both countries, we estimate that cuts to come this year are not fully priced in while most EMs seemingly have already concluded their easing cycles," said analysts at BofA Global Research, led by David Beker.

"We see a higher correlation with local short-term rates for stocks in Brazil ... Additionally, some sectors in Brazil continue to trade at discounts versus historicals despite the 2025 rally."

Brazilian stocks .BVSP climbed 0.7%, largely helped by a 3% gain in Petrobras PETR4.SA after the oil company said its estimated proven reserves of oil, condensate and natural gas rose to 12.1 billion barrels of oil equivalent in 2025, from 11.4 billion in 2024.

Currencies in Mexico MXN= and Colombia COP= rose 0.1% and 0.3% respectively, supported by a 5% advance in oil prices. Stocks in Mexico .MXX gained 0.5%.

Trade representatives from the U.S. and Mexico agreed to formal discussions on possible reforms to the United States-Mexico-Canada trade agreement, U.S. Trade Representative Jamieson Greer's office said.

The MSCI measure of Latam stocks .MILA00000PUS was 1% higher.

Stocks in EMs have rallied to record highs recently as investors diversified out of U.S. stocks, and as the frenzy around AI-linked and commodity-heavy equities helped lift appetite.

South Africa's central bank kept its main lending rate unchanged at 6.75%, saying it wanted to see inflation expectations fall further and citing potential price pressures.

Key Latin American stock indexes and currencies: