Many Latin American currencies are expected to strengthen further against the U.S. dollar over the next 12 to 18 months as strong global demand for commodities and a weaker greenback continue to support the region, according to forecasts from banking giant Citi. The outlook is positive for commodity-exporting economies but could create headwinds for Latin America’s export-oriented services sector, including business process outsourcing (BPO) and software development companies that earn most of their revenue from U.S. clients. A stronger local currency makes their services more expensive in dollar terms and can squeeze profit margins. He added that stronger commodity demand and a weaker dollar are creating a favorable macroeconomic environment by improving the region’s terms of trade. Similar appreciation trends are forecast for several other regional currencies.