Investing.com – Alpine after the US presidential election Macro (BCBA:) has suggested three emerging market (EM) currency trades, especially if the Trump administration implements increased protectionism.
The key pairs include the Mexican Peso (MXN) against the Brazilian Real (BRL), (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 due to its growing trade surplus with the US
The company notes: “Mexico recently overtook China as the largest exporter to the U.S.,” making it a potential target of any potential trade war. They explain that the Mexican peso, already under downward pressure, could weaken further if tariffs enhance, 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 provides a compelling analogue in this industry.
Short Thai Baht vs Singapore Dollar
Thailand’s economic recovery is lagging behind other countries in the region, leaving the baht vulnerable to downward pressure, especially in airy of Thailand’s flexible stance.
Meanwhile, according to Alpine analysts, “Singapore’s economy is on the verge of overheating”, which prompted the Monetary Authority of Singapore to enhance the SGD exchange rate.
This policy divergence is said to create an attractive trade structure, as Singapore’s forceful financial inflows and resilient economy contrast sharply with Thailand’s weaker fundamentals.
Short Chinese Yuan vs. japanese yen
Alpine Macro says CNY is vulnerable to US tariffs and the currency may weaken to keep China competitive in exports.
In contrast, the yen remains undervalued and has been a safe-haven currency, which is seen as particularly attractive as post-election uncertainty increases.
They further note that while China’s central bank continues to ease monetary policy, Japan’s Bank of Japan is one of the few in the world that continues to tighten policy, supporting the strength of the yen.
