Volatility in emerging‑market currencies has fallen to its lowest level since the start of the year, re‑energising carry trades that favour Latin American currencies.

Latin America offers higher interest rates than most developing‑nation peers, creating a strong carry‑to‑risk profile that attracts traders. The region’s oil‑exporting economies also add insulation against rising oil prices amid the renewed Iran conflict.

Borrowing in the dollar and buying the Colombian peso has returned 22%, a strategy targeting the Brazilian real has gained 12.9%, and another investing in the Argentine peso has climbed 12.8%. In contrast, trades in the Polish zloty, Indonesian rupiah and Thai baht have all lost at least 5%. The Brazilian real tops the carry‑frequencies list with a ratio of 1.33.

Despite the upside, risks remain: elections in Brazil and Colombia, potential El Niño impacts, and political uncertainty. Still, strong commodity exports, tightening monetary policy and high real yields keep Latin American currencies attractive to carry‑trade investors.