The most devalued currencies in Latin America in 2022

The aggressive increase in interest rates in the US by the Fed in the face of the sharp rise in inflation, and the search by investors for refuge assets in the face of fears of a global recession, strengthened the dollar in a good part of 2022, especially in the third quarter of the year.

In Colombia, even the Colombian peso exceeded $5,000 and entered the basket of most devalued currencies in the region.

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However, that trend has moderated and while the US currency remains strong, current conditions have led to the foreign currency losing ground and the dollar to Colombia is located at a price close to $4,700, far from the $5,000 that it managed to register.

“The future of the exchange rate in Colombia will continue to depend to a large extent on external factors, such as the outlook for inflation and interest rates in the US and the possible global recession. At the local level, uncertainty in economic matters, in particular the possibility of an early withering of the oil industry, are generating greater uncertainty for the market and could push the exchange rate to new all-time highs (above $4,700) in the coming months”indicated a Corficolombiana report that explains the trend that the Colombian peso could have in the midst of the current scenario.

(The peso, but Mexican, the third most appreciated currency against the dollar).

Although the Colombian currency registered a strong devaluation so far this year, the Argentine peso surpasses it.

According to figures from LACI index (Latam Currency Index), which measures the behavior of LatAm currencies against the dollar, the Colombian peso fell 14.31%, while the Argentine currency lost 41.14%.

In the region, the third most devalued currency was the Chilean peso, which lost 2.46%.

At the other extreme is the Uruguayan peso, which not only appreciated the most in the region, but also one of the best performers in the world’s basket of currencies.

A series of interest rate hikes, a boom in exports and foreign investment have helped send the currency soaring more than 14% so far this year, making it Latin America’s best-performing currency. Its gains surpassed even those of the real, which benefited from the Brazilian central bank’s early fight against inflation.

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The money of Uruguay it was also the fourth best in the world after the Armenian dram, Afghan afghani and Georgian lari, according to data compiled by Bloomberg.

Among the currencies that appreciated the most in Latin America is the Brazilian real, which rose 7.79%, followed by the Mexican peso and the Peruvian sol, appreciation of 4.95% and 4.79% respectively.

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