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USD/MXN jumps as carry-trade unwind pressures Mexico’s peso
Since mid-September, USD/MXN has risen 8%, and the peso is the worst performing LatAm currency since the start of September, MUFG says.
MUFG’s Derek Halpenny said rising rates volatility is spreading into broader EM FX carry trade liquidations, putting LatAm currencies under particular pressure. FXStreet reports that the peso is being hit as implied volatility increases and leveraged long positions are squeezed.
FXStreet said USD/MXN has surged 8% since the middle of September and that MXN is the worst performing LatAm currency since the start of September. The move reflects IMM positioning data showing leveraged funds’ long position in MXN at the highest level since the start of 2023.
Halpenny also warned that risk aversion could extend further, noting that Switzerland’s franc and Japan’s yen were the top performing G10 currencies on the day and that those moves could continue.