Latin American currencies remain attractive for carry trades as high local interest rates draw investor flows, JPMorgan Private Bank said on Thursday.
Nur Cristiani, head of investment strategy for Latin America at JPMorgan Private Bank, noted that strategies borrowing in dollars to invest in the Colombian peso since the start of 2026 have delivered returns of roughly 27%, more than double the S&P 500’s performance over the same period. The Colombian peso ranks among the highest-yielding currencies globally, supported by robust carry trade demand.
Brazil’s overnight rate, near 14%, remains a key driver despite concerns over public debt dynamics, making the real a favored target for carry strategies despite fiscal uncertainties. The strategy’s attractiveness is further bolstered by a weaker dollar environment, which has reduced hedging costs and amplified returns.
Chile emerged as JPMorgan’s top regional pick, offering a balance of earnings growth, valuation appeal and macroeconomic stability. Copper prices have improved Chile’s terms of trade, while the central bank’s easing cycle has concluded, reducing policy uncertainty. Cristiani suggested the bank may adopt a more hawkish stance later in the year, though without disrupting the positive outlook.
The broader Latin American currency complex benefits from proximity to the U.S. market and abundant natural resources, positioning the region to capitalize on geopolitical tensions between Washington and Beijing. Treasury market dynamics have also played a role, with supportive conditions in recent weeks easing funding pressures for carry trade positions.
