LatAm FX climbs as oil prices jump on Middle East uncertainty

Brazil's real BRL= rose 0.4% against the dollar, marking a second straight day of gains, even though it hovered near its one-month lows.

"Given expectations of a narrower interest-rate differential between domestic and international markets throughout 2026, combined with a potential recovery of the U.S. dollar globally, we estimate the exchange rate will reach BRL 5.35 per U.S. dollar by the end of 2026," Rabobank analysts said.

The dollar has appreciated against most global currencies recently as investors expect interest-rate hikes by the U.S. Federal Reserve this year amid the oil spike, a sharp turnaround from expectations of rate cuts seen before the Iran war.

In emerging markets, the Colombian peso has strongly outperformed so far this month as the victory of right-wing President-elect Abelardo de la Espriella fueled expectations of a more business-friendly administration and reduced political uncertainty.

MSCI's index for regional currencies edged 0.3% higher, while regional stocks added 1.1%.