Following an extended period of weakness, it appears that Latin America’s currencies have finally started to find their feet. Most have been broadly flat against the dollar so far this month, while the Brazilian real and the Colombian peso have both rebounded strongly. Looking ahead, large current account deficits in most countries suggest that currencies remain vulnerable to periods of heightened market volatility. Nonetheless, most currencies now look fairly valued and, as a result, we do not expect another significant leg down.
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