The post Mexican Peso reverses in technical bounce and revival of carry appeared on BitcoinEthereumNews.com.

The Mexican Peso executes a technical bounce and rises despite negative fundamentals.  The move could be technically inspired or as a result of a revival in carry flows due to the weakening Yen.  USD/MXN pulls back after testing the 20.00 hurdle. The pair remains in a broader uptrend.  The Mexican Peso (MXN) edges higher on Thursday following a reversal on Wednesday, in which it first fell to a one-month low against the US Dollar (USD) but then reversed – partly due to technical buying – and recovered by an average of about half a percent in its most heavily-traded pairs – the USD/MXN, EUR/MXN and GBP/MXN. A revival of the carry trade due to the recent depreciation in the Japanese Yen (JPY) might be a further factor in the Peso’s recovery. Mexican Peso recovers: Potential revival of the carry trade? The Mexican Peso executed a surprising volte face in its key pairs on Wednesday and builds on the rebound on Thursday. One possible explanation for the recovery, given MXN’s negative fundamentals, is the weakness experienced by the Japanese Yen, which could be reviving investor interest in the carry trade and, as a result, raising demand for the Peso.  The Mexican currency tends to be a key beneficiary of carry flows because of its relatively high interest rates offered to depositors in Mexico, influenced by The Bank of Mexico’s (Banxico) cash rate, which is 10.50%. This compares to only 0.25% in Japan, where interest rates are stuck at low levels due to endemic deflation.  The carry operation involves borrowing capital in a low-interest currency, such as the Japanese Yen, and using the money to buy a higher interest-paying alternative, such as the Mexican Peso. The difference between the cost of servicing the Yen-denominated loan and the interest earned on the MXN…

---

Filed under: News - @ October 24, 2024 9:24 am