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Latin America: External vulnerabilities leading to weak currencies – Rabobank

FXStreet (Delhi) – Research Team at Rabobank, note that the Latin America currencies have weakened substantially against the US dollar during 2015 but given the global environment, as well as some specific domestic woes, this theme is unlikely to change in the near term.

Key Quotes

“While for some countries domestic (political and economic) factors have played their part, it has largely been external forces driving the selling. The prospect of a Fed hike, falling commodity prices and weaker global demand in general weigh on Latin America currency valuations.”

“LatAm currencies are most vulnerable to external forces from an interregional comparison, with the Brazilian real standing out. Of course, periods of correction can be expected but these are likely to offer better levels for re-instating Latin America shorts rather than signalling a reversal of fortunes.”

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