Among currencies, the Colombian peso COP= firmed 0.6% after logging its biggest decline in over a year in the previous session, following the central bank's surprise announcement to build up its international reserves.
In Brazil, industrial production registered its biggest month-on-month drop since late 2025 in June, data showed on Tuesday, reinforcing expectations for a rate cut from the central bank, which starts its policy meeting later in the day.
"The data reinforce our view that Brazil's industrial recovery is losing momentum. Restrictive financial conditions remain the principal headwind," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.
Though, Abadia added that persistent inflation and still-elevated inflation expectations argue against an aggressive pace of rate cuts.
The Brazilian real BRL= declined 0.3%, while stocks .BVSP gained 0.4%.
Markets are also bracing for impact from a severe El Nino that could impact food production and energy generation and potentially drive inflation, with countries such as Colombia, Peru and Brazil most exposed.
Analysts at Bank of America Global Research estimate that the weather phenomenon puts around 35% of Argentina's wheat output at risk, while Brazil's corn production could decline by around 10% year-on-year.
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