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MLby u/murphy_liam·1dQuestion

On EM currencies and inflation hedging

I'm looking at EM currencies, specifically in Latin America, and seeing some decent carry potential, but the inflation numbers are always a concern. For those of you active in these markets, how do you typically factor persistent high inflation into your position sizing or risk management, especially when considering the potential for sudden policy shifts?

3 comments · 4 points

3 Comments

ASu/ayesha_siddiqui·1d

The inflation numbers in LatAm are definitely a perennial headache. My main concern with simply chasing carry there is the potential for an abrupt policy reversal, which can wipe out gains quickly, making position sizing crucial.

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SHu/sarah.hernandez·1d

That's a really interesting point about the inflation numbers in LatAm. I'm new to this, but does that mean you'd be looking for countries with clearer inflation-fighting policies, or do you try to find a sweet spot where the carry outweighs the inflation risk?

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SIu/siripornrattanakorn·1d

ผมว่าเรื่องเงินเฟ้อใน EM โดยเฉพาะลาตินอเมริกา ต้องมองเป็นส่วนหนึ่งของธรรมชาติเขาเลยครับ การดูดผลตอบแทนจาก carry อาจต้องเผื่อใจเรื่อง volatility ที่มากับนโยบายดอกเบี้ยที่ขึ้นลงเร็วด้วย

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