Economics
UBS's Top 2016 Trade Starts Year Flying as Mexican Peso Tumbles
- Peso is worst performer this year among most-traded currencies
- UBS advises shorting peso, wagering on lower interest rates
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The Mexican peso is tumbling so much and so fast that one of UBS Group AG’s most-touted emerging-market trades for 2016 is already halfway to its return target.
The success of UBS’s recommendation to bet against the currency reflects how a country that was once seen as an emerging-market bright spot is now starting to catch up to a selloff that sparked losses of at least 25 percent last year in Brazil, Colombia and South Africa. The peso’s 6 percent drop this year is the worst among its most-traded peers as concern mounts that the rout in oil prices will worsen the current-account deficit in a nation that UBS says is over-reliant on funds from foreign investors.