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Latam stocks down 0.8%, FX down 0.7%

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Mexico's central bank cuts 2025, 2026 growth forecasts

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Brazil's Azul slumps on bankruptcy filing

(Updates with mid-session prices)

By Pranav Kashyap and Purvi Agarwal

May 28 (Reuters) - Most Latin American currencies

weakened against a strengthening dollar on Wednesday, while

investors awaited results from AI titan Nvidia ( NVDA ), which could set

the tone for equity markets.

MSCI's broad gauge for the region's currencies

fell 0.7% as the greenback ticked up

0.4%, extending gains from the previous session.

Its counterpart for equities eased 0.8%,

retreating from a more than eight-month peak hit the previous

session.

Heavyweight Brazilian stocks lost 0.4%, weighed down

by the nation's airline Azul tumbling as much as 13%,

after it initiated Chapter 11 bankruptcy protection proceedings

in the U.S. earlier in the day.

Brazil's equity gains on Tuesday were largely powered by

data showing the country's inflation rate decelerated for the

third consecutive reading, suggesting that the central bank's

sustained efforts to keep interest rates at their highest in

nearly two decades are beginning to yield results.

The real lost 0.9%, the most among peers.

Fresh GDP figures for the first quarter, due for release on

Friday, may shed more light on Brazil's economic landscape, and

help investors gauge if the monetary policy tightening cycle in

the country has finally concluded.

"The inflation numbers yesterday were surprisingly soft. My

money is on 2026 for the first cut but we have plenty of time

from here to there," said Brad Bechtel, global head of FX at

Jefferies.

The view was supported by economists at Itau Unibanco,

Brazil's largest private lender.

Meanwhile, Mexico is on the cusp of its first-ever judicial

elections this Sunday. Voters will cast ballots for federal

judges and magistrate roles, a roster that includes all Supreme

Court justice positions.

The Mexican peso still bears the scars of a market

exodus triggered when President Claudia Sheinbaum, a key

proponent of the judicial overhaul, secured her presidential

victory in June 2024.

That same month was the most brutal for the peso since the

COVID-19 pandemic in 2020, and ratings agency Moody's warned

that the reforms could carry significant implications for the

country's sovereign rating in September.

"While the judicial elections stand out for their complexity

and unprecedented scope, markets seem relaxed about their

implications," said analysts at UBS.

On the day, Mexican equities were slightly higher, just shy

of the record high hit in the previous session.

Meanwhile, the peso weakened 0.8%. The central bank slashed

its growth forecasts for the economy in 2025 and 2026, citing

"sluggish" domestic activity and U.S. trade uncertainty.

Currencies in Colombia and Chile slid 0.3% and

0.4% respectively, in line with broader market weakness.

Investor attention has pivoted to the quarterly results from

AI bellwether Nvidia ( NVDA ) due after the U.S. market close.

Meanwhile, minutes from the Federal Reserve's last meeting

showed that policymakers acknowledged risks of rising inflation

and unemployment in the coming months, reiterating the central

bank's data-dependency.

Elsewhere, El Salvador's international dollar bonds were

little changed. The International Monetary Fund reached an

agreement with the nation to disburse approximately $120

million, following the successful first review of an ongoing

$1.4 billion, 40-month program.

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1163.89 -0.02

MSCI LatAm 2256.33 -0.80

Brazil Bovespa 139012.75 -0.38

Mexico IPC 58649.39 0.09

Chile IPSA 8266.84 -1.02

Argentina Merval 2349855.0 -0.22

5

Colombia COLCAP 1647.2 0.38

Currencies Latest Daily %

change

Brazil real 5.6895 -0.85

Mexico peso 19.4077 -0.77

Chile peso 940.95 -0.43

Colombia peso 4122.5 -0.27

Peru sol 3.64 -0.03

Argentina peso (interbank) 1160 0.86

Argentina peso (parallel) 1150 1.30