Colombian peso COP=, the region's best performing currency this year, added 2.2% to those gains, and hit its strongest level since April 2019.
The broader Latin American equities index .MILA00000PUS gained 3.1%, with equities in Argentina .MERV leading the gains, climbing 2.4%.
Chilean stocks .SPIPSA rose 0.5%, tracking higher copper prices, as the country is the leading exporter of the metal. Chile's peso CLP= gained 0.8%.
Mexico's benchmark equity index .MXX advanced 1.2%, while the peso MXN= rose 0.5%.
Preliminary data showed that the Mexican economy grew at its fastest pace since late 2020 in the second quarter, fueled mainly by primary activities such as farming, fishing, and mining.
In Brazil, President Luiz Inacio Lula da Silva's attempt to reduce consumer debt through a debt-relief program has brought little reward, with data showing household debt easing only marginally in May.
The local currency real BRL= rose 1%, while its equities .BVSP added 1.5%.
Political developments in the region's largest economy remain in the spotlight ahead of its October presidential election amid a growing rightward shift in the region.
"The political shift to the right in Latin America is likely to lead to a stronger geopolitical alignment with the U.S. and economic policies that reduce country risk premia," said William Jackson, chief EM economist at Capital Economics.
Brazil has been withholding the formal diplomatic approval for the next U.S. ambassador to take up his post, deepening the country's leftist government's rift with Washington, while the president also confirmed that the government had denied visas to two U.S. officials, accusing them of seeking to interfere in the election.
Economies in the region are also bracing for a severe El Nino from October to December that could further disrupt agricultural supplies that were already strained by the Middle East conflict.
A UN official said on Thursday that there is a high probability that it could be an intense El Nino like the one in 2015.
Colombia's stocks .COLCAP gained 1.2% to its highest in over a month. The country's central bank is expected to raise its benchmark interest rate on Friday's meeting.
Argentina's currency ARS=RASL and the Peruvian sol PEN= firmed 0.5% each.
Elsewhere, Ukraine's central bank unexpectedly delivered a 50 basis points rate hike and signaled further policy tightening to curb inflation pressures.
Markets rally on weaker dollar and stronger commodities
Latin American currencies advanced on Thursday against a softer dollar as investors assessed key economic data from the U.S., while higher metal prices lifted equities in the resource-rich region.
U.S. economic growth slowed in the second quarter, while separate data showed that the Personal Consumption Expenditures (PCE), the Federal Reserve's preferred gauge for inflation, came in line with analysts' expectations.
MSCI's index tracking Latin American currencies .MILA00000CUS advanced 1.3%, and hit its highest level in more than two months as the dollar index =USD slipped to an over one-month low following a near 3% jump in the Japanese yen JPY=D3, with traders alerting to a suspected intervention from Japan.
The broader Latin American equities index .MILA00000PUS gained 3.1%.
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