Demand for the Mexican Peso (MXN) carry trade is gaining momentum ahead of the Bank of Mexico's (Banxico) upcoming policy decision, positioning MXN as the best-bought currency on a weekly basis, according to FX Street.
Despite this surge in carry demand, trading volumes remain weak, and equity flows have deteriorated, while sovereign bond demand is only modest, tempering the overall outlook for the peso's strength.
For Japanese investors, the MXN's appeal as a carry currency highlights ongoing opportunities in emerging market FX amid cautious global equity sentiment and low yield environments at home.