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LatAm stocks up 0.54, FX up 0.42%

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Argentina's draft 2026 budget hikes social allocations

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Brazil's jobless rate falls in July, hits new record low

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Fed, Brazil start two-day rate-setting meeting

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Mexican stocks closed for Independence Day

(Updates with afternoon trading)

By Pranav Kashyap and Nikhil Sharma

Sept 16 (Reuters) -

Latin American assets firmed on Tuesday, with the local

currency index clinching another record milestone as traders

prepared for interest rate decisions from the U.S. Federal

Reserve and Brazil's central bank this week.

An index tracking the region's currencies

jumped 0.42% to a new high, marking its fifth

consecutive record-setting session, as it leveraged a weaker

dollar, which dropped to an over three-year low.

An index for Latin American equities also

rose 0.54%.

Argentine assets attempted a rebound, with Buenos Aires

stocks jumping over 2% after three straight days of

declines, while the peso remained steady. The

country's economy likely contracted in August due to higher

imports.

President Javier Milei on Monday

unveiled

a 2026 budget that pledged fiscal discipline but includes

increases in healthcare, education and pensions - an effort to

regain public confidence ahead of a high-stakes legislative

election following a setback in recent provincial elections.

"Our main takeaway from the announcement is the positive

shift in tone, with Milei conveying a more pragmatic approach

that could help broaden his base of support," said Trevor Yates,

senior investment analyst at Global X ETFs.

While his austerity measures, including deep spending cuts,

have sharply reduced triple-digit inflation, they have also

gutted public services and sparked near-daily protests in the

capital.

In the United States, the Federal Reserve's two-day

policy meeting is widely expected to conclude with a

25-basis-point cut on Wednesday, following signs of a weaker job

market.

Brazil's central bank also begins a two-day policy

meeting, with markets expecting it to hold the Selic rate at

15%, near a 20-year high. The restrictive policy, aimed at

cooling inflation, has started to weigh on growth, prompting

calls for rate cuts later this year.

The real extended its gains for a fifth consecutive

session, rising 0.4%, while Brazilian stocks also

advanced.

Fresh data showed the jobless rate fell for the fourth

consecutive month in July, reaching a record low, reflecting

labor market resilience despite tight monetary policy.

Brazil's benchmark interest rate, one of the highest in

Latin America, has continued to provide market players with

solid returns due to its differential over U.S. borrowing costs,

making the real a preferred destination for carry-trade flows.

Brazil's finance minister said interest rate cuts could

begin in the coming months. However, analysts noted that even if

Brazil resumes its easing cycle, the real would likely remain an

attractive option for carry trades.

"The real is doing well and has appreciated strongly and

inflation is on the right path. So there's going to be an

increasing focus on when the Central Bank of Brazil can move

forward," said Alejandro Cuadrado, global head of FX and LatAm

Strategy at BBVA.

"The Fed is probably going to open room for that," he

added.

The Hungarian forint has outperformed its

regional peers this year, supported by one of the highest

interest rates in Europe.

The Colombian peso rose 0.92% to a one-month high as

retail sales surged 17.9% in July on a year-on-year basis,

exceeding expectations, while the main stock index

fell 0.53%.

The Mexican stock market remained closed for Independence

Day, while the peso continued to trade, up 0.4% against the

dollar.

Elsewhere, the Zambian kwacha gained 0.6% to a

two-week high against the euro after the International Monetary

Fund's executive board approved a three-month extension of the

country's loan program.

Key Latin American stock indexes and currencies:

Stock indexes

Latest Daily % change

MSCI Emerging Markets 1340.6 0.89

MSCI LatAm 2531.89 0.54

Brazil Bovespa 144103.61 0.39

Mexico IPC - -

Chile IPSA 9065.86 -0.25

Argentina MerVal 1784380 2.04

Colombia COLCAP 1837.25 -0.53

Currencies Latest Daily % change

Brazil real 5.2951 0.4

Mexico peso 18.2817 0.4

Chile peso 947.38 0.44

Colombia peso 3865.5 0.92

Peru sol 3.478 0.32

Argentina peso (interbank) 1,469.0 -0.07

Argentina peso (parallel) 1,445.0 0.69