For those looking for an intra-region play, BNP Paribas’ Dela Fuente points to the underlying fundamentals in favor of a long Brazilian real/short Mexican peso trade.
The bullish yield differential in favor of the real, as well as the expectations for weaker growth in Mexico, make it a “good core position.”
The official Brazilian short-term rate stands at 13 percent, vs. the Mexican rate of 7 percent.
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