MUFG Flags EM Carry Unwind Pressuring LatAm Currencies

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Summary · why it matters

MUFG's Derek Halpenny says rising rates volatility is driving a broader unwind of emerging-market FX carry trades, with Latin American currencies coming under particular pressure. USD/MXN has surged as implied volatility jumps, squeezing long leveraged positions in the Mexican peso. The carry liquidation is pressuring LatAm currencies more broadly, according to the MUFG note.

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