Bank of New York has begun trading a new Brazilian fashion trade on the Mexican peso, citing higher carry and relative valuation advantages.

The bank successfully achieved a long target on the Brazilian real/Mexican peso at 3.45, targeting 3.80, with a minimum loss of 3.20, according to a research note released Tuesday. This trade yields a positive return of 5.6%, with a historical multiple of 12%.

Bank of America analysts noted that the "carry" strategy has been highly effective in the foreign exchange market in 2024, benefiting from the inclusion of implied assets in the breakdown. Both the Brazilian real and the Mexican peso have high carry, outperforming by more than 10% since the beginning of the year, and we chose the bank over the Brazilian real.

The research highlights that the Brazilian real is currently trading lower than the Mexican peso, with greater potential for alfandro earnings at the moment. This factor has been a key factor in the bank's trading position.

Bank of America identified several possibilities for this position, including any unexpected changes in the Mexican central bank's coordinated policy or in Brazilian politics ahead of the 2026 elections, which could determine its adjustments.