Latin American FX: Real, Peso and Andean Currencies — 2026-09-08
Brazil’s real strengthened significantly as markets reopened after Independence Day, driven by commodity strength and easing political tensions, while the Mexican peso faced mild depreciation due to low liquidity during the US holiday. In Argentina, the blue dollar gap narrowed slightly, and the central bank halted its streak of daily dollar purchases for the first time in months.
Latin American FX: Real, Peso and Andean Currencies — 2026-09-08
Top developments
Brazil: Real Strengthens Past 5.10 as Political Tensions Ease
Brazil’s currency appreciated notably, with the real trading below the 5.10 level against the US dollar on Tuesday, September 8, marking its strongest performance since late July. The appreciation was supported by a "sawtooth" pattern in local politics, where investors interpreted the narrowing gap in electoral polls between President Lula and opposition figures as a reduction in immediate policy risk. This move matters for regional carry trades, as a stronger real combined with Brazil’s high Selic rate (expected to remain at 14% or see a minor cut to 13.75% in September) continues to attract foreign capital seeking yield.
Mexico: Peso Dips on Low Liquidity and US Holiday Effects
The Mexican peso experienced slight depreciation against the dollar on Monday, September 7, primarily due to reduced trading volumes associated with the Labor Day holiday in the United States. Despite the short-term weakness, analysts maintain a bullish outlook for the peso into 2027, citing the substantial interest rate differential between Banxico (6.50%) and the Fed (3.50%). The market consensus estimates the peso could strengthen to 17.50 per dollar by year-end, supported by robust remittance flows and export resilience.
Argentina: Blue Dollar Gap Narrows; BCRA Halts Dollar Purchases
The Argentine blue dollar rose slightly at the start of the week but remained volatile, converging closer to official rates amid a "sawtooth" trading pattern. A significant signal emerged when the Banco Central de la República Argentina (BCRA) failed to buy dollars on Monday, September 7, breaking a streak of 27 consecutive days of net purchases. Despite this pause, international reserves remained stable above US$50 billion, indicating that the central bank is managing accumulation pace rather than facing a liquidity crisis.
Regional Context: Commodity Prices Support Andean Currencies
Andean currencies like the Chilean peso (CLP) and Colombian peso (COP) remained relatively flat or slightly stronger, buoyed by record-high copper prices and Brent crude oil above US$98 per barrel. Chile’s inflation print of 6.24% did not significantly derail the peso due to the commodity tailwinds, while Colombia’s COLCAP index hit a record high, reflecting investor confidence in the region’s resource-heavy economies.
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Local view
Local media in Brazil highlighted the "institutional crisis" narrative but noted that the market's reaction was muted compared to previous political shocks, suggesting investors are increasingly pricing in long-term structural reforms over short-term polling noise. In Mexico, El Financiero reported that the peso is "squeezing" the remaining benefits from the rate differential, with experts warning that the window for easy carry trades may be closing as the Fed signals potential hikes. Argentine outlets like Ámbito focused heavily on the BCRA’s decision to pause purchases, interpreting it as a strategic move to preserve reserves ahead of the legislative elections later this year.
Context & numbers
- USD/BRL: ~5.09–5.10 (Strongest since late July)
- USD/MXN: ~16.95–17.00 (Slight depreciation on low volume)
- USD/ARS (Official): 1,530
- USD/COP: ~3,121
- USD/CLP: ~933
- Key Rates: Banxico 6.50%; Fed 3.50%; Brazil Selic 14.00% (Cut to 13.75% expected in Sept)
On the radar
- Brazil Copom Meeting: The committee meets in late September to decide on the next Selic rate move, with markets pricing in a 25 basis point cut to 13.75%.
- US Inflation Data: Upcoming CPI releases will determine if the Fed maintains its hawkish stance, directly impacting the MXN and BRL carry trades.
- Argentina Reserves Watch: Investors are monitoring if the BCRA resumes dollar purchases after the brief pause, which would signal continued confidence in the macroeconomic program.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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