Mexican Peso: Carry trade unwind risks into Q4 – Societe Generale
Societe Generale’s Kenneth Broux warns that one defining September theme in EM has been a sharp unwind in carry trades, particularly in the Mexican Peso, which is down 6% on spot this month.
Societe Generale's Kenneth Broux has cautioned that one of the key themes for emerging markets in September has been a significant unwinding of carry trades, especially in the Mexican Peso, which has decreased by 6% against the Dollar this month. As the month concludes, the Mexican Peso's decline against the Dollar stands at 6%, while the total return basis shows a drop of 5.2%.
The peso's downward trend may continue into the fourth quarter, contingent on the movements in the UST yields, oil prices, and the implications of the US mid-term election results on fiscal policy. The South African Rand (ZAR) is currently at a crucial point, near the 200-day moving average at 16.38, following a rebound from sub-16.00 levels after disregarding the 25 basis points rate hike by the SARB.
A reversal in the US long, in the fourth quarter, coupled with a recovery in the Yen, could intensify the currency's corrective trajectory, potentially affecting financial instruments like the Mexican Peso and ZAR.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
