BNY says Latin American FX is being supported by stronger balance-of-payments dynamics and an improving carry backdrop, even as equity market sentiment softens. The bank points to robust regional financial account inflows during the conflict period as a buffer against renewed US Dollar strength, and adds that elevated dollar positioning reduces the risk of large outflows if dollar preference rises. It also observes that dollar hedges are at their lowest level this decade, yet this has not undermined Latin American currencies.
Mexican Domestic Activity And Monetary Outlook
In Mexico, upcoming retail sales (Tuesday) and IGAE activity data (Thursday) are expected to show only moderate domestic-demand momentum, leaving Banxico’s easing path intact as real rates remain high versus price risks. Biweekly CPI is forecast at 3.25% year on year, alongside barely any sequential growth in both headline and core readings.
Peruvian Sol Positioning And Comparative FX Returns
BNY also flags the Peruvian sol (PEN) as the region’s only clearly underheld currency, while judging Latin American FX total return potential to be weaker than EMEA and APAC high-yield peers.
