EM Traders Buy Local Debt as Election Shocks Upend FX Bets
- Spike in volatility for Mexican peso damages its carry appeal
- Traders chase local bonds, other FX with less political noise
A currency exchange bureau in Bodrum, Turkey.
Photographer: Moe Zoyari/BloombergThis article is for subscribers only.
Emerging-market investors are turning to local bonds and relative-value currency trades in the aftermath of election shocks that crushed long-standing bets in some of the largest developing economies.
Ashmore Plc and Ninety One are among those adding to positions in local debt, particularly in frontier markets. Others are recommending currencies like the Polish zloty, seen as relatively insulated from political turbulence after volatility roiled popular carry trades like the Mexican peso. Turkish assets are also emerging as a favored bet.