Latin American markets saw little change on Tuesday, but stock and currency indices were set to close 2024 with sharp annual losses, as expectations of fewer interest rate cuts in the U.S. pushed up the dollar and capped a turbulent year for the region.

Trading was light on the final session of the year, with markets closed in Brazil.

The Mexican peso weakened by 0.3% yesterday and closed its worst year since 2008, as the Bank of Mexico appears ready to continue its monetary easing cycle, increasing concerns over trade with the United States.

USD/MXN

Mexico’s main stock index rose 0.4% on Tuesday but recorded the sharpest annual decline among regional stock markets, falling by around 15%, the largest drop since 2018.

The MSCI regional equity and currency indices both rose by 0.3% and 0.2%, respectively.

Latin America Overall Performance

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Latin American markets have performed significantly worse than emerging markets overall during 2024, with annual losses of 30.6% for regional equities and 11.2% for currencies.

The currency index broke a two-year streak of gains, posting its worst annual loss since 2020, while Latin American equities suffered their largest annual drop since 2015.

The dollar and Treasury yields have risen in December after the U.S. Federal Reserve signaled a more cautious pace of interest rate cuts in 2025, putting considerable pressure on emerging market assets.

Latin American economies, in particular, have struggled this year due to slower growth in China, a key consumer of commodities, political unrest, and inflation.

For 2025, most investors are expecting fewer rate cuts from the Fed, and anticipate that policies under the new U.S. president, Donald Trump, will continue to support the dollar, further weighing down returns on investments in emerging markets.

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.