Brazil's real and Chile's peso are expected to rally in the first half of the year, according to the region's top foreign-exchange forecaster. The forecast anticipates a period of strength before a busy election cycle introduces volatility across Latin America. This prediction sets the stage for currency traders monitoring the region's political calendar.

The forecast hinges on the typical pre-election stability that often benefits emerging market currencies before uncertainty takes hold. Investors typically seek higher yields in these economies ahead of potential policy shifts. The forecaster's credibility adds weight to this outlook, suggesting a tactical window for currency gains.

What to watch next will be political developments and economic data that could alter this trajectory. The forecaster's view will be tested by actual election outcomes and their market reactions. Investors will weigh these currency calls against broader risk sentiment in emerging markets.