(Bloomberg) -- Bank of America Corp. closed out its recommendation for investors to bet on declines in the Mexican peso against the Brazilian real, saying that worries about the US’ southern neighbor are taking longer to materialize. 

“We got stopped in long BRL/MXN and have lost conviction as Brazil’s politics are more volatile than expected,” the bank’s strategists said in a note on Friday. Moreover, “our concerns about MXN (weaker US labor market, US election risks) keep getting postponed.”

The Mexican peso has strengthened more than 3% against the US dollar since BofA initiated its recommendation on Nov. 17, lagging only the Colombian peso among its developing-nation peers. The real weakened about 5% during the same period, with traders growing wary of President Luiz Inacio Lula da Silva administration’s attempts to meddle in big Brazilian corporates.

Read More: Mexican Peso Is So Strong Investors Fear Betting Against It 

The popular cross-currency ratio between the Mexican peso and the Brazilian real is at its highest level since 2003, thanks to a combination of an attractive carry-to-volatility ratio, relatively stable politics in Mexico, record remittances from workers in the US and the so-called nearshoring trend.

The Wall Street bank, which initiated the long BRL/MXN recommendation with a target of 4.00 and a stop of 3.25, said the trade was closed at 3.24 on Wednesday.

It voiced caution about the Mexican currency. “We think that MXN positioning is literally the highest ever,” the strategists wrote.

Non-commercial traders — a group that includes asset managers, hedge funds and other speculative market players — are the most bullish on the peso since early 2020, according to data from the Commodity Futures Trading Commission.

--With assistance from Carter Johnson and Davison Santana.

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