Taking stock of the latest currency sell-off

The fall in most Latin American currencies over the past few weeks has taken them through both our end-2014 and our end-2015 forecasts. We still expect most currencies – notably the Brazilian real – to weaken further against the dollar next year and have revised our forecasts accordingly, but on the whole we think that the bulk of the adjustment is now behind us. Indeed, if oil prices now stabilise, there may even be room for the Mexican peso to appreciateover the next twelve months.