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Brazil's central bank flags caution over US tariffs

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Colombian inflation reading expected

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Trump threatens higher tariffs on India

(Updates with afternoon levels)

By Purvi Agarwal, Sukriti Gupta and Ragini Mathur

Aug 5 (Reuters) -

Most Latin American currencies were flat to marginally

higher against the U.S. dollar on Tuesday, while regional stock

markets advanced on growing optimism that the U.S. Federal

Reserve may soon ease its monetary policy.

MSCI's Latam currencies gauge inched up

0.2% against a steady dollar.

Investors globally were also keen on U.S. President

Donald Trump's choice to fill an

open seat

on the Federal Reserve's Board of Governors that could

shape the stance of the world's most influential central bank.

In Latin America, Brazil's real edged 0.1% lower,

while stocks inched up 0.3% after the Brazilian central

bank

signaled caution

regarding the potential impact of new U.S. import tariffs

on specific sectors, and reaffirmed its policy stance aimed at

lowering inflation expectations.

Brazil faces one of the highest tariffs, at 50%, on certain

goods exported to the U.S.

However, analysts believe the country is unlikely to

suffer significant consequences from these steep levies, given

the limited share of its exports destined for the U.S. and the

range of exemptions the country received last week.

"In the case of Brazilian exports, agricultural produce

and some semi-manufactured products have increased since the

beginning of the year," said Alfredo Coutino, director for Latin

America at Moody's Analytics.

"So that means that even though they are targeted by

U.S. tariffs, it hasn't been significantly affected by the

tariff because now they are probably trying to send those

exports to different areas in the world."

Currencies of major copper exporters were mostly steady,

with Chile's peso remaining flat, while Peru's sol

edging up 0.3%.

Colombia's peso gained 0.2%. The Colombian central

bank revised its inflation projections higher for 2025 and 2026

on Monday, ahead of a consumer price index reading.

Mexico's peso appreciated 0.9% to touch a near

one-week high. The regional

central bank is expected

to deliver its verdict on monetary policy later this week,

with economists suggesting an interest rate cut of 25 basis

points.

Regional bourses also rose, with MSCI's index tracking

Latam stocks up 0.6%, putting it on course for a

second session of gains.

Mexican stocks advanced 0.9%, and shares in

Argentina added 2.6%.

Adding to the upbeat mood, UN's Economic Commission for

Latin America and the Caribbean (ECLAC) raised growth projection

for some of the Latam countries for year 2025.

Elsewhere, Russian President Vladimir Putin is

unlikely to yield to a sanctions ultimatum

from the U.S., which expires this Friday, sources close to

the Kremlin told Reuters.

The rouble closed 0.2% lower on the day.

Trump has threatened new sanctions and 100% tariffs on

countries buying Russian oil, mainly China and India, unless

Putin agrees to a ceasefire in Ukraine.

Trump said he would raise tariffs on Indian imports over the

next 24 hours, given the country's continued purchases of

Russian oil.

India's rupee was down 0.2% on the day, while

stocks slipped 0.3%, as markets closed before the latest

announcement.

The rupee is among the few currencies that have depreciated

against the dollar so far this year, compared to other emerging

market currencies that capitalized on the dollar's weakness in

2025.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1246.8 0.79

MSCI LatAm 2256.87 0.60

Brazil Bovespa 133424.8 0.34

Mexico IPC 57044.34 0.7

Chile IPSA 8190.26 -0.24

Argentina Merval 2347175.4 2.6

Colombia COLCAP 1757.04 0.31

Brazil real 5.5048 -0.12

Mexico peso 18.7332 0.86

Chile peso 965.27 -0.01

Colombia peso 4090.1 0.19

Peru sol 3.554 0.29

Argentina peso 1338.5 1.36

(interbank)

Argentina peso (parallel) 1305 -0.8