2024-04-17 13:36:26
A board showing the exchange rates of the Mexican peso against the U.S. dollar and the euro is seen at a currency exchange office in Mexico City, Mexico July 5, 2023. REUTERS/Henry Romero (Reuters/Reuters)
(Bloomberg) – “Superpeso,” the world’s best-performing major currency since late 2016, is under pressure as traders unload even their most profitable positions.
The peso was one of the worst currencies yesterday, falling as much as 2%, as traders sold high-yield currencies and bought the dollar. The real group includes the Brazilian peso, the Colombian peso, the Polish zloty and the Hungarian forint.
Exchange rate driven by geopolitical risks; American currency at a standstill
Bear traders are offloading their positions in emerging markets as funding costs rise and geopolitical risks fuel higher volatility. understood.
Even the Mexican peso, this year’s star currency, is not safe from the anti-riskiness that is shaking world markets.
Investors, wary of less liquid currencies, were previously attracted to the “superpeso” by a combination of high interest rates, low volatility and political stability. But recent spikes in volatility following stronger-than-expected inflation data and US retail sales figures, added to the rebound in the dollar, are prompting traders to review their positions.
“Increased volatility coupled with the prospect of a lower rate differential is a risk averse environment”said Miguel Iturribarria, strategist at BBVA Mexico.
BBVA’s projection is that the peso will reach 17.40 per dollar in the next two months and that the year will end at 18.20 per dollar, from the current 17.
The currency’s weight has implied sharp increases in volatility, as traders assess the attractiveness of carry trades, in which they borrow in lower-yielding currencies to buy those offering higher yields.
The volatility in the Mexican peso was so intense – one-month volatility rose to 13.4% on Tuesday, up from 7.4% at the end of March – that its Colombian counterpart was the best choice to carry trade in Latin America .
A beneficial position on the Peso has increased the currency’s bearish trend. Data from the CME Group futures exchange in recent weeks showed an increase in betting on the futures, with leveraged fund positions reaching 57,711 contracts in the week to April 9, the highest since March 2023.
Continue reading the story
Although the long-term positives are expected to still outweigh the negatives and the Mexican currency will be protected by the country’s close ties to the United States and the impact of exports, the currency would still be affected until further releases .
“We’ll see volume drop again and with that, we’ll see USD/MXN retrace the recent lows in the coming weeks,” said Christian Lawrence, strategist at Rabobank in New York.
Translated by Paulina Munita.
Original Note: The Massive Global Behavioral Trade The ‘Super Peso’ hits the trade release
—In collaboration with Michael O’Boyle and Maria Elena Vizcaíno.
©2024 Bloomberg LP
YOU MAY ALSO BE INTERESTED | ON VIDEO
Fierce debate on the strength of the Mexican peso against the dollar
#Huge #sales #impact #emerging #markets