LatAm FX Recovers as Markets Weigh US-Iran Deal Progress

LatAm FX Recovers as Markets Weigh US-Iran Deal Progress

Most Latin American currencies pared earlier losses on Thursday as investors weighed reports of a potential breakthrough in U.S.-Iran talks aimed at ending the war, while regional stocks were mixed as domestic developments kept markets uneven.

Mexican Peso and Economic Outlook

The Mexican peso appreciated 0.3%, while local stocks fell 1.6%. The Bank of Mexico lowered its 2026 economic growth forecast to 1.1% from 1.6%, warning that uncertainty tied to negotiations could weigh on investment in the second half of the year.

Brazilian Real and Central Bank Tone

Brazil's real rose 0.6%, while the Bovespa was down 0.3%. The central bank's monetary policy director Nilton David struck a hawkish tone, stating that higher inflation expectations will not be allowed to feed into actual inflation.

Colombia and Chile Markets

Colombia's peso weakened 0.2%, and the COLCAP index lost 0.3%. Investors await the first round of presidential elections this weekend. Chile's equities gained 0.5% tracking higher copper prices, while the peso appreciated 0.6%.

Overall Outlook

MSCI's index of Latin American currencies reversed earlier losses to trade 0.6% higher, while the regional stocks gauge was flat. U.S. inflation data did little to alter expectations that the Fed will ease monetary policy later this year.