Following the recent U.S. presidential election, Alpine Macro (BCBA) has highlighted three emerging market (EM) currency trades that could gain traction, particularly if heightened protectionist policies take hold under the current administration. The suggested pairs include shorting the Mexican peso (MXN) against the Brazilian real (BRL), the Chinese yuan (CNY) against the Japanese yen (JPY), and the Thai baht (THB) against the Singapore dollar (SGD).

1. Short Mexican Peso (MXN) vs. Brazilian Real (BRL)

Alpine Macro points to Mexico’s potential vulnerability to a more protectionist U.S. approach, given its expanding trade surplus with the U.S. With Mexico recently becoming the largest exporter to the U.S., the peso could face significant pressure if tariffs rise. In contrast, Brazil’s limited trade exposure to the U.S. and supportive fundamentals make the Brazilian real an appealing counterpart in this trade, according to Alpine Macro analysts.

2. Short Thai Baht (THB) vs. Singapore Dollar (SGD)

Thailand’s economic rebound has lagged behind that of neighboring countries, with the baht potentially weakened further by Thailand’s easing policies. On the other hand, Singapore’s economy is strong, with the Monetary Authority of Singapore taking steps to bolster the SGD amid rising financial inflows. This divergence in economic strength and policy direction between Thailand and Singapore offers an attractive opportunity, favoring the Singapore dollar over the baht.

3. Short Chinese Yuan (CNY) vs. Japanese Yen (JPY)

Alpine Macro analysts suggest that the Chinese yuan may be vulnerable to additional U.S. tariffs, which could further weaken the currency to support China’s export competitiveness. In contrast, the Japanese yen, seen as a “safe-haven” currency, holds appeal amid post-election uncertainties. Additionally, while China’s central bank maintains an easing stance, Japan’s Bank of Japan remains one of the few central banks globally still adopting a tightening approach, which bolsters the yen’s potential strength.

Each of these trades reflects a strategic approach to navigating potential shifts in currency dynamics driven by evolving economic and policy landscapes across these regions.