By Purvi Agarwal

Jan 31 (Reuters) - An index tracking Latin American currencies hit its highest in over two months on Friday, ahead of U.S. President Donald Trump's approaching Feb. 1 tariff deadline, as a week packed with monetary policy decisions drew to a close.

MSCI's index tracking Latin American currencies .MILA00000CUS was up 0.2%, on track for its biggest monthly rise since June 2023, reaching its highest level since November.

The Brazilian real BRL= led gains among currencies, strengthening 0.8% against the dollar, recouping some losses from the last two sessions.

Data showed Brazil's gross debt rose less than expected in 2024, supported by the central bank's sale of foreign reserves in December, amid concerns of worsening inflation and high government spending under President Luiz Inacio Lula da Silva.

The week saw monetary policy decisions in Chile and Brazil, along with the U.S. Federal Reserve, where it kept rates on hold.

Colombia's peso COP= was down 0.4% against the greenback, ahead of a local monetary policy decision where the central bank is widely expected to opt for a smaller rate cut.

"Globally, the stance against inflation has been on a backstop and that is maybe pushing appetite towards asset classes in a different rate environment," said Daniel Porto, director at Deaglo.

"The expectation is that interest rates are going to be higher for longer in these markets and steady in the U.S., and that is giving room for these FX swings."

Regional stock indexes built on their stellar gains logged in the previous session. MSCI's index measuring stocks .MILA00000PUS was little changed but set for its biggest monthly jump since October.

Chile's IPSA stock index .SPIPSA was up 0.9%, while Brazil's Bovespa .BVSP added 0.2%. Mexico's main index .MXX was off 0.6%.

Meanwhile, Trump on Thursday said he was still deciding whether to exclude oil imports from his 25% tariffs on Mexico and Canada, for which he had set a Feb. 1 deadline. Mexican President Claudia Sheinbaum, however, said she will wait with a cool head for a decision.

The currency's fall on Thursday added to the at least seven occasions since Trump's November election where the peso tumbled over 1% against the dollar. On the day, it was up 0.1%.

Implied single-week Mexican peso-dollar volatility MXNSWO= covering the weekend rose to its highest since last November's U.S. election, showing traders are positioning for sharp moves as the currency is among the most exposed to U.S. tariffs.

Both the Argentine peso ARS= and its Merval index .MERV were flat.

Argentina's central bank cut interest rates by 300 basis points to settle at 29% on Thursday, as inflation continues its downward path in South America's No. 2 economy.

Key Latin American stock indexes and currencies:

(Highlights:** New leaders in Brazil’s Congress unlikely to bring respite for a struggling Lula ** Syria's Islamist rulers overhaul economy with firings, privatization of state firms ** Brazil's jobless rate hits lowest yearly average ever in 2024Reporting by Purvi Agarwal in Bengaluru, Editing by William Maclean)

((Purvi.Agarwal@thomsonreuters.com;))