World's Best Carry Trade Is Buying Mexican Peso: Rabobank
- Currency is tops when adjusting for volatility and liquidity
- Peso has been the No. 2 emerging-market carry bet this year
Photographer: Susana Gonzalez/Bloomberg
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Investors seeking to profit from steep interest rates in emerging markets would do best to buy Mexican pesos, according to Christian Lawrence, a strategist at Rabobank.
Projections for the next three months show the currency generating an annualized return of about 8 percent for investors who buy the peso in a so-called carry trade, according to Lawrence, whose bank is among the most bearish forecasters for the currency. While that’s slightly lower than volatility-adjusted potential returns on Turkey’s lira or India’s rupee, Lawrence says the peso’s liquidity makes it a much more attractive bet.