BNY senior EMEA market strategist Geoff Yu said rising market volatility and the possibility of higher G10 interest rates are complicating Latin American foreign-exchange (FX) carry trades, FXStreet reported Wednesday, Nov. 4.
Yu said the region had not gained a clear terms-of-trade lift in 2026 despite supply constraints. He argued that stronger real rates would help Latin American central banks keep monetary policy restrictive, and told FXStreet, “Real rates aren’t making headway.” The reference to G10 rates concerns an external risk, while the need for real-rate gains concerns policy conditions in Latin America.
FXStreet’s account of BNY positioning showed lighter exposure to the Brazilian real and Peruvian sol. Buying momentum was weak only in the real, the report said. Efforts to establish long positions in the Mexican peso had slowed. BNY’s data also showed the Colombian and Chilean pesos were heavily overheld, with sales or added hedges reported in both.
Yu expected Brazil’s and Mexico’s central banks to leave policy unchanged, according to FXStreet. Banco Central do Brasil’s calendar lists the Monetary Policy Committee (Copom) meeting for Tuesday and Wednesday, Nov. 3-4. Banco de México’s calendar schedules its next policy announcement for Thursday, Nov. 5; the official calendars establish the dates, while the hold calls remain Yu’s forecast.
