Trump's unintentional gift: how the Fed's erosion opens Latin America's doors to the euro

"Latin America is reducing its dependence on the dollar, and it is doing so (at least in part) as a reaction to the policies of Donald Trump's second administration. The increasing politicization of the U.S. currency—from the use of tariffs and sanctions to tensions with the Federal Reserve—has led various governments in the region to seek more predictable alternatives for financing themselves in international markets. And the euro has emerged as the main option for dealing with institutional uncertainty in the United States."

"In 2025, Latin American economies issued $182.5 billion worth of debt on international markets, of which 9.7% was denominated in euros, the highest proportion since 2016. This surge contrasts sharply with the low of 1% recorded in 2023, when Joe Biden was still in the White House. Notable transactions included those of Mexico (with a $2.5 billion bond in January and another one worth $5.5 billion in September), Colombia ($4.8 billion in September and $2 billion in November), and Chile ($1.7 billion in January and $1.5 billion in July)..."

"The trend intensified in the first quarter of this year, coinciding with Washington's military intervention in Venezuela and its subsequent attack on Iran. Amid this geopolitical chaos, the euro's share in Latin America reached 12%, while the dollar fell to 81%. Total issuance reached $56 billion, with Mexico and Chile leading the way, according to figures from the Bank of Spain. However, this advance of the euro is encountering limitations that the eurozone's own architecture has yet to resolve."

"David A. Meier, an economist at Julius Baer, points out that, despite having credible institutions, the single currency lacks some of the foundations that underpin the dollar's primacy: deep financial markets and a cl"

Latin America is reducing dependence on the dollar by seeking more predictable financing options in international markets. U.S. currency politicization through tariffs, sanctions, and tensions involving the Federal Reserve has encouraged governments in the region to diversify. The euro has become the main alternative for managing institutional uncertainty in the United States. Bank of Spain data show Latin American economies issued $182.5 billion of international debt in 2025, with 9.7% denominated in euros, the highest share since 2016. The euro share rose from 1% in 2023. Mexico, Colombia, and Chile issued multiple euro bonds, while private issuance was limited. In the first quarter of this year, euro share reached 12% as dollar share fell to 81%, alongside geopolitical turmoil involving Venezuela and Iran. The euro’s expansion faces structural limits in the eurozone, including less developed deep financial markets compared with the dollar system.

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