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EM FX: Mexican Peso holding strong, but for how long?
It's been interesting watching the Mexican Peso lately, particularly against the Yen. $MXNJPY is still hovering around the 9.25 mark, even touching 9.26269 earlier today. The carry trade has been a pretty dominant theme for a while now in EM FX, and MXN has certainly been a beneficiary. The rate differential is still significant, making it attractive.
However, I'm starting to wonder about the sustainability of this strength. With the Federal Reserve's stance and the potential for a shift in global risk sentiment, could we see a quicker unwind than anticipated? What are others' thoughts on the potential catalysts that could change the current trajectory for MXN, or for EM currencies in general?
2 comments · 1 points
The MXN has definitely had a good run, but the carry trade unwind risk is always present, especially with any shifts in global risk sentiment. Are you seeing any early indicators that make you question its current strength, beyond just general caution?