Investing.com — Now that the US presidential elections are behind us, Alpine can Macro (BCBA:) has proposed three currency deals in emerging markets (EM), especially if the Trump administration ushers in increased protectionism.
The top pairs are shorting the Mexican Peso (MXN) against the Brazilian Real (BRL), the (CNY) against the Japanese Yen (JPY) and the Thai Baht (THB) against the Singapore Dollar (SGD).
Short Mexican Peso vs Brazilian Real
Alpine Macro highlights Mexico’s vulnerability to a second Trump term, given the growing trade surplus with the US
The company notes, “Mexico recently surpassed China as the largest exporter to the US,” making it a potential target in a potential trade war. They explain that the Mexican peso, already under downward pressure, could weaken further if rates rise, while Brazil’s trade ties with the US are minimal.
According to Alpine, the Brazilian real is supported by favorable fundamentals. As a result, they believe it is an attractive counterpart in this trade.
Short Thai Baht vs Singapore Dollar
Thailand’s economic recovery has lagged behind the region’s, leaving the baht exposed to downward pressure, especially in light of Thailand’s easing policy.
Meanwhile, “Singapore’s economy is on the verge of overheating,” prompting the Monetary Authority of Singapore to send the SGD higher, Alpine analysts said.
This policy difference is said to create an attractive trading environment as Singapore’s strong financial inflows and resilient economy contrast with Thailand’s weaker fundamentals.
Short Chinese Yuan vs Japanese Yen
Alpine Macro says the CNY is sensitive to US tariffs, with the currency potentially weakening to maintain Chinese export competitiveness.
The yen, on the other hand, remains undervalued and “has been a ‘safe haven’ currency,” which is seen as particularly attractive as post-election uncertainty increases.
Moreover, they note that while China’s central bank continues to ease, the Bank of Japan is one of the few global banks still tightening, supporting the yen’s strength.
