Trump’s LatAm gambit spurs FX hedging rush
Venezuela op boosts risk reversals as investors look to protect carry trades
Demand for protection against a selloff in key Latin American (LatAm) currencies has been rising steadily since December, as investors look to protect their carry trades from geopolitical impacts and dealers try to pare back tail risks.
Foreign exchange options notional volumes in Brazilian real and Mexican peso reached $8.2 billion and $3.5 billion, respectively, on January 5. That is 57% and 65% higher than their previous three-month averages, following the US military operation to capture
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