Emerging market currencies are on the rise, arbitrage trading is once again booming.

Emerging market arbitrage trading is on the rise again, as signs indicate that US President Trump's aggressive tariff measures may not be fully implemented, and currency volatility has decreased. The arbitrage profit index hit a seven-year high at the end of May. According to data compiled by Bloomberg from the Chicago Mercantile Exchange Group, asset management companies have increased long positions in emerging market currencies in recent weeks, with long positions in the Mexican peso reaching a nine-month high. "It does make sense to engage in arbitrage trading at this juncture," said Ali Bora Yigitbasioglu, Senior Fixed Income Investment Manager at Pictet Asset Management in London. Given that the White House has relaxed some of its aggressive trade policies, "arbitrage currencies will definitely benefit," he said.