Latin American Stocks and Currencies Edge Higher Amid Mixed Outlooks, Turkey’s Turmoil Adds Volatility

Latin American equity markets and currencies showed resilience in early April 2025, with weekly gains emerging despite persistent headwinds from global trade tensions and regional inflationary pressures. Meanwhile, Turkey’s economy remains under scrutiny as political instability and central bank losses cloud its recovery. Below, we dissect the key drivers and risks shaping these markets.

Latin America: Gains Amid Volatility

While Latin American stocks faced short-term dips, Mexico’s IPC and Colombia’s COLCAP indices demonstrated modest resilience, with year-to-date (YTD) gains through mid-April.

• Mexico’s IPC closed at 55,484.05 on April 17, down 0.56% from the previous session but still up 3.5% YTD through April 11. The index’s performance reflected optimism around corporate earnings (e.g., Grupo Financiero Banorte’s 9% Q1 profit rise) and hints of cautious monetary policy shifts.
• Colombia’s COLCAP fell 0.91% to 1,355.86 on April 17, but broader regional data shows the MSCI Latin America index down nearly 10% YTD by the same date. Colombia’s participation in this decline underscores challenges tied to inflation and delayed IMF negotiations.

The region’s mixed trajectory reflects divergent fundamentals:
- Brazil’s Ibovespa stabilized near 128,000 points after volatile weeks, while Chile’s IPSA led YTD gains with 11.2% through early April.
- Argentina’s Merval saw extreme volatility, falling -2.465% on April 17, as hyperinflation (289.4% in April 2024) and currency devaluation persist.

Turkey: Inflation Eases, But Political Risks Linger

Turkey’s economy remains in flux. While consumer price inflation fell to 38% in March 2025—down from 39% the prior month—the central bank’s aggressive rate hikes (to 46% in 2025) and staggering losses highlight systemic fragility.

• Central Bank Losses: The TCMB reported a 700 billion lira ($18 billion) loss in 2024, its second-worst on record, due to efforts to defend the lira and compensate depositors under now-defunct schemes.
• Political Uncertainty: Protests over the arrest of Istanbul’s opposition mayor and U.S. tariffs have intensified risks, prompting the central bank to signal further rate hikes.

Currencies Under Pressure, But Signs of Resilience

Regional currencies faced headwinds from a strengthening U.S. dollar and commodity price fluctuations, though some showed short-term rebounds:

• Chilean Peso (CLP): The USD/CLP rate hit 971.17 on April 14, up 5.5% from late March. Technical indicators suggest bearish momentum, with analysts forecasting a potential 1,100 USD/CLP by year-end due to copper dependency and fiscal vulnerabilities.
• Argentine Peso (ARS): The ARS continued its slide, with the official rate at ARS 800/USD (a 54% devaluation from 2023) and the unofficial rate nearing ARS 1,000/USD.

Conclusion: Opportunities Amid Uncertainty

Latin American markets face a mixed outlook. While Mexico and Colombia’s indices remain within positive YTD ranges, broader regional declines (e.g., MSCI LatAm’s -10% YTD) suggest external pressures like U.S. dollar strength and trade wars are limiting gains. Turkey’s inflation slowdown offers a glimmer of hope, but political instability and central bank losses ($18 billion in 2024) cast doubt on its recovery.

Investors should prioritize sector-specific resilience, such as Mexico’s financials (e.g., Banorte) and Chile’s copper-linked equities. Meanwhile, currency risks demand hedging strategies, particularly for the CLP and ARS. With the TCMB’s April 17 policy decision and U.S. rate signals looming, 2025 could see diverging paths: some Latam markets may stabilize, while Turkey’s volatility persists unless reforms and geopolitical calm materialize.

Stay nimble—and watch the Fed.