High interest rates in the region continue to attract capital through carry trade operations, with the Colombian peso and Brazilian real among the top performers.
Volatility in emerging market currencies reached its lowest level since the start of the year. This has revived carry trade operations, particularly in Latin America.
The Brazilian real recorded a 12.9% return in dollar-funded strategies. The Colombian peso reached 22% and the Argentine peso 12.8%, according to data compiled through July 19.
Chris Turner of ING Bank noted that low volatility draws capital to a region less exposed to the energy crisis. Brendan McKenna of Societe Generale highlighted Colombia's favorable electoral outcome and local central bank policies.
