Latin America FX Round-Up: Relative Resilience Amid Global Headwinds

• Latin America’s (LATAM) relative distance from the US-Iran conflict, combined with the region’s commodity-export orientation and the fact that elevated global uncertainty has kept overnight rates higher than expected, has underpinned regional foreign exchange (FX) performance in the first half of 2026 (H1 2026).
• Much of this strength was already priced in before the escalation, suggesting the current performance reflects resilience rather than further upside. That said, the picture beneath the surface is uneven. Net oil exporters like Brazil have outperformed, benefitting from stronger commodity revenues, while net importers like Chile have absorbed the shock more painfully through higher fuel costs, imported inflation and episodic bouts of dollar strength on risk-off flows.
• Even where non-energy export prices have held up, as with Chilean copper, the oil import bill has risen faster and by more than enough to offset the gains. A broader geopolitical realignment and increased international attention on the Western Hemisphere have provided additional support for sentiment across the region.
• The conflict has also complicated the region’s monetary policy trajectory. The oil-driven pass-through inflation has narrowed the window for rate cuts just as many central banks were positioning to ease, forcing policymakers to trade off growth support against renewed price pressures. The ceasefire has provided relief for regional FX, but the stop-start nature of diplomacy and Fitch’s view of continued supply disruptions mean that energy-driven volatility is likely to remain the key swing factor for regional currency performance in the near term.

(Source: BMI, A Fitch Solutions Company)