INR 5Y

Alpha Bites: Pay India 5y Vs Receive Mexico 5y Local Rate

FX & Rates
192 Views, 10 Jan 2022 22:45
EXECUTIVE SUMMARY
  • With rates in India vulnerable to a further correction in the US, I recommend paying India 5y vs receiving Mexico 5y rate in a beta-neutral ratio.
  • Real rates in India are the lowest among major emerging countries, which along with rising inflation expectations and strong growth should pressure the RBI to raise rates soon.
  • Mexico is appealing as a receiver against paying in India because the central bank is further along in its monetary tightening cycle as is evident from the high real rates.
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Gautam Jain, PhD, CFA
Fixed Income and Currency Strategist
FX & RatesMacroeconomics

Gautam Jain has over 25 years of experience covering global emerging fixed income and currency markets, both as a strate... 

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