EMERGING MARKETS-Latam FX steady in holiday-thinned trade; Peru politics in focus

By Pranav Kashyap

Feb 16 (Reuters) - Most Latin American currencies held to tight ranges on Monday, coming off one-week lows from the prior session, as holiday-thinned markets kept trading subdued.

Regional stocks were rattled late last week just as they were looking set to post respectable weekly gains. But much of that momentum vanished as risk appetite soured, with fresh AI-driven jitters rippling across U.S. sectors from software and insurance to trucking.

With Brazil, Argentina, Venezuela, China, South Korea, Taiwan, the United States and Indonesia closed for holidays, volumes were light and price action largely muted.

Indexes tracking Latin American equities .MILA00000PUS edged up 0.1%, while the currency gauge .MILA00000CUS ticked 0.3% higher.

"In essence, volatility is slowly retracing but remains structurally high versus pre-sell-off levels because macro catalysts still anchor uncertainty," said analysts at the derivatives desk of Laser Digital.

The region is short on major data this week, leaving investors likely to take cues from the U.S. for direction. That said, economic releases from Mexico and Colombia are due later in the week.

Peru's economy grew 3.4% in 2025, fresh data showed.

Peruvian assets will be in the spotlight after Congress scheduled a Tuesday debate on a motion to remove President Jose Jeri, as the government wrestles with a scandal over reports of the president's undisclosed meetings with a Chinese businessman.

The Andean nation has been mired in persistent political turbulence, with seven presidents, including Jeri, sworn in since 2016. Peruvians are also gearing up for a national election on April 12 to choose the next president.

The sol PEN= edged up on thin turnover, while stocks in Lima slipped 0.1%. Peruvian stocks, which outpaced regional peers in 2025, were up about 21% year-to-date.

Markets in oil exporters Colombia and Mexico saw modest gains as crude prices were little changed. The Colombian peso COP= rose 0.4%, while stocks .COLCAP were flat. Mexico's peso MXN= was flat, with stocks .MXX down 0.2%.

Elsewhere, Nigeria's annual inflation rate cooled slightly to 15.10% in January, potentially giving the central bank room to cut rates next week, when it is set to deliver its first monetary policy decision of 2026.

The Nigerian naira NGN= hovered near its strongest levels in more than a year and a half, while stocks in Lagos .NGSEINDEX surged 4.4%.

"We think the central bank will restart its easing cycle at next week's policy meeting and follow this up with deep cuts to the policy rate over the remainder of the year," said David Omojomolo, Africa economist at Capital Economics.

Key Latin American stock indexes and currencies: