Single-country Latin America ETFs have struggled this year and the iShares MSCI All Peru Capped ETF (NYSEArca: EPU) has not immune to those problems. EPU’s trials and tribulations are quite familiar to investors that actively follow commodities and foreign exchange markets along with developing world equities.

The $316.8 million EPU has tumbled over 26% this year, putting it firmly in bear market territory, due to a plunging sol and sliding precious and industrial metals prices. Peru entered 2013 on a high note, bolstered by expectations the country would be South America’s fastest-growing this year. Indeed, the country posted first-quarter GDP growth of 4.8%, which sounds nice, but is not compared to the 5.9% growth clip seen in the fourth quarter. [Plunging Metals Prices Victimize Peru ETF]

Peru’s status as the world’s largest silver-producing country and a major gold and copper producer has done more harm than good to EPU this year. However, the impact of precious metals on country-specific ETFs is a knife that cuts two ways. In the past month, six of the 10 top-performing non-leveraged ETFs are related to gold or silver and three of those funds are pure mining plays. Over that time, EPU has gained just over 8%. [Risky or Cheap? Silver Miners May be Both]

The fund has a 45.4% weight to materials names. Southern Copper (NYSE: SCCO) and Buenaventura Mines (NYSE: BVN) are EPU’s second- and third-largest holdings, combining for almost 21% of the fund’s weight while giving EPU ample leverage to price action in copper and silver futures.

With EPU not being a currency-hedged ETF, there is sol risk. The sol hovers around 2.8 to one U.S. dollar and on Monday, Barclays lowered its 2013 year-end forecast to 2.85 and its 2014 forecast to 2.95. However, the bank is more enthused by the sol than the Chilean peso.

“BCRP is more likely to manage the PEN’s volatility than the BCCh [Chile’s central bank] is of intervening in the CLP [Chilean peso] market. As a result, we do not think the USD/PEN is likely to go above 2.90. On the other hand, the USD/CLP does not have a ceiling, and while we expect the USD/CLP to only rise by about 3% over the next six months, it could touch levels above 520 in the event of a global shock. In short, the USD/CLP does not have a ceiling,” according to a Barclays research note posted by Barron’s.