In 2023, the Colombian and Mexican pesos led growth against the U.S. dollar among emerging market currencies.
The Colombian peso’s strength was due to strong economic performance and higher commodity prices, boosting foreign investment and currency demand.
Conversely, high interest rate differentials and robust remittance inflows notably strengthened the Mexican peso among emerging markets.
Bloomberg’s data confirms this trend. The Brazilian real also ranks high, placing fourth. However, the Polish zloty and Costa Rican colón have mixed standings in this group.
In contrast, the Argentine peso has struggled greatly. It ranks as the second weakest globally.
In Argentina, the value of the U.S. dollar has soared from AR$ 133.20 to AR$ 807.73. Only the Lebanese pound has fared worse worldwide.
Some regional currencies, like the Chilean peso, saw brief periods of instability. Despite this, they have remained steady overall.
They are likely to end the year close to their starting values, even if slightly lower.
Bloomberg’s global rankings highlight the Colombian peso’s significant rise. It is second only to Afghanistan’s afghani.
The Mexican peso and Costa Rican colón are also top performers. The Brazilian real is further down the list but still notable.
From late 2022 to late 2023, several currencies appreciated against the dollar. The Colombian peso rose by over 23%, and the Mexican peso by nearly 14%.
Others like the Costa Rican colón, Brazilian real, and Peruvian sol also saw gains. Even the Uruguayan peso and Guatemalan quetzal modestly increased.
Looking at countries with investor-friendly laws and strong judicial systems
Some currencies, however, depreciated. These include the Bolivian boliviano and Honduran lempira, with slight decreases.
Others like the Paraguayan guaraní, Nicaraguan córdoba, Dominican peso, Chilean peso, and notably, the Argentine peso, saw more significant drops.
Jorge Ángel Harker from Adcap Grupo Financiero explains these trends. He links the positive performance mainly to the U.S. dollar’s decline.
Over two months, the dollar index dropped significantly. This fall aligns with the movements of many Latin American currencies.
Looking ahead, questions arise about a potential boom in Latin America’s emerging markets.
Harker urges caution. He advises looking at countries with investor-friendly laws and strong judicial systems.
These factors will likely indicate which currencies will increase in purchasing power.