Latin American currency market volatility

The outlook for Chilean and broader Latin American currencies is heavily influenced by global market connections and central bank policies. In late August 2026, the Chilean peso's strength was identified as being driven by international copper prices and divergent interest rate adjustments between the Central Bank of Chile and the US Federal Reserve.

By mid-September 2026, regional currencies experienced further shifts as traders anticipated interest rate decisions from the US Federal Reserve and Brazil’s Copom. During this period, the Chilean peso weakened, with the ‘dólar observado’ reaching 940.91 pesos per dollar, its strongest level against the peso in a month. This trend was part of a wider softening of Latin American currencies, including Brazil’s real.

In mid-September, the Mexican peso also experienced significant depreciation, breaking the 17 pesos per dollar barrier. This decline was attributed to a combination of geopolitical tensions in the Middle East—specifically attacks on energy infrastructure in Saudi Arabia and maritime tensions near the Strait of Hormuz—and shifting monetary policy expectations in the United States. These factors increased global oil prices and heightened risk aversion, prompting investors to seek refuge in the US dollar as markets priced in a high probability of an interest rate hike by the US Federal Reserve.