Pessimism against the weight in Chicago moderates

Negative sentiment towards the Mexican peso prevailed for another week among speculators on the Chicago Futures Exchange (CME), although net short positions moderated.

From October 12 to 18, 22,300 contracts were registered against the peso, of 500,000 pesos each. When compared to the previous period, bids were lower by 33.83%, that is, 11,400 contracts were cut.

Gabriela Siller, director of Economic Analysis at Banco Base, said that the more moderate positions of speculators on the Chicago Stock Exchange reflect the stability that the exchange rate has maintained in recent weeks and a lower probability of an accelerated depreciation. of the Mexican peso against the dollar.

When speculators – investors or exporters and importers who carry out operations with the currency – maintain net short positions, they consider that the peso is going to depreciate against the dollar.

This trend has been maintained for 19 consecutive weeks, since it began the week of June 8 to 14 and has been extended until October 18.

However, in the last three weeks, net positions against the peso have been shortened, reaching their lowest level since the second half of August.

“In the futures market, speculators remain cautious regarding the peso, since positions have been short for weeks, which indicates that they continue to expect that at some point greater pressure will be reflected for the Mexican currency, as indicated by the consensus expectations for the end of the year”, said Juan Manuel Lozada, analyst at Citibanamex.

In the most recent Citibanamex Outlook Survey, analysts continue to expect the peso to remain stable and close this year at levels of 20.50 units per dollar. For the end of 2023, the exchange rate is projected at 21.27 units per greenback.

dollar index down

The Dollar Index, which measures the strength of the US currency against a sample of six benchmark currencies, closed last week down 1.36 percent. Only on Friday it fell 0.89%, to 111.88 points, according to Investing data.

According to Gabriela Siller, the decline in the dollar was mainly due to two factors. On the one hand, the Japanese government intervened in the foreign exchange market to stop the depreciation of the yen.

“Although the intervention was not confirmed, it is likely that it was the cause behind the strengthening of the yen in the Friday session, allowing the currency to close with a weekly appreciation of 0.69% and trading at 147.65 yen per dollar. Along with the appreciation of the yen, most currencies gained ground against the dollar,” Siller wrote in his daily report.

The second reason is due to the fact that speculation about the pace of interest rate increases in the United States has moderated. The rate of the 10-year Treasury notes reached a level of 4.3354%, a level not seen since November 7, 2007. After this, the rate showed a strong downward correction during the session on Friday, to close at 4.21 percent.

“It should be remembered that part of the strengthening of the dollar is due to increases in the interest rate on Treasury assets, which favors the demand for dollars in the foreign exchange market,” explained the specialist.

Weight has a positive week

The peso ended the week below 20 units per dollar, with which it had a weekly appreciation of 0.72%, or 14.43 cents.

On Friday it closed at 19.9345 pesos per dollar, a slight gain of 0.61 percent.

Other currencies that appreciated against the greenback during the past week were the Brazilian real (-3.22%), followed by the Mexican peso (-0.72%) and the Peruvian sol (-0.27%).

Among the most depreciated currencies were the Colombian peso (+4.82%) and the Chilean peso (+1.26%).

Among the strong currencies that beat the dollar, the pound sterling (2.01%) and the euro (1.63%) stand out.

On the Colombian peso, on Friday it lost 0.29% and marked a new record closing low of 4,918.10 units per dollar. The coin managed to fall to an unseen low of 4,958.90 units.

The Colombian currency has even suffered a sharp drop against the dollar in the midst of a complex economic situation in the world, with a view to a possible recession in the United States in 2023.

It currently ranks as the sixth most devalued currency in the semester against the dollar. (With information from agencies)

judith.santiago@eleconomista.mx