The positive outlook for the Mexican peso returns this year, as the speculative net positions of the currency on the Chicago Mercantile Exchange (CME) stood at 4,900 contracts in favor of the appreciation of the local currency, its best level since December 2020.
Net positions against the peso began to decline from December 10 when they were at 64,100 contracts, their worst level since January 2017, and then closed 2021 at 4,800 positions against.
The exchange rate stood at 20.4480 pesos per dollar until Friday, January 21, registering an appreciation of 0.29% so far in 2022, although after seven weeks of appreciation, last week it had a depreciation of 0.65 percent.
Even since November 26, when the Omicron variant of the coronavirus was declared a concern, the peso showed an appreciation of 6.35% until Friday, January 21 of this year.
The constant increases in the interest rate of Banco de México during 2021 are having an effect on the stability of the Mexican currency, in addition to the preference of investors for risky assets such as emerging currencies.
However, the possibility of volatility in futures positions among investors is not ruled out, with some weeks rising and others falling, given the expectation of the effects of increases in the interest rate of the United States Federal Reserve. .
increased confidence
Janneth Quiroz, deputy director of Analysis at Monex, said that speculators’ contracts on the CME were at their best level for the peso since December 2020, with a sharp rise. “Now it is a net long position, it is a recovery that has occurred since mid-November.”
The specialist explained that “what we see is that speculators estimate that the peso will perform better in the coming months, which has to do with the existing certainty about the steps that the Federal Reserve will take, since that was one of the main factors that had been putting pressure on the local currency”.
In fact, the Fed has said that it would end the bond purchase program at its March meeting and, according to experts, the interest rate would begin its upward cycle in March or until May.
“We also began to see short net positions in December due to the appearance of the Omicron variant that caused a lot of volatility, despite the fact that the large number of infections were not serious.” Quiroz said.
“With the above, we see an improvement in investor sentiment, and there is the possibility that the market has a greater appetite for risky assets, now that these factors weighed down the peso, we now have more information about the impact of these in the economy,” he said.
James Salazar, deputy director of Economic Analysis at CIBanco, mentioned that the net speculative positions of the peso are reflecting the trend that the Mexican currency has been showing, that is, of constant appreciation.
“Strictly speaking, what we were observing is that there was an appetite for higher risk assets, especially interest on the peso, which ended up reflecting positions in favor of the local currency,” he commented.
“On the other hand, investors’ interpretation that the Fed will raise its rate is a sign that the economy is on the right track, that the macroeconomic indicators are solid and recovered,” explained Salazar.
The analyst said that despite the Fed’s rate hike, the margin remains negative due to high inflation, which allows a profit margin for emerging economies such as Mexico, added to an expectation of a rise in the price of oil that benefits to countries dependent on this raw material. And finally, the rate hike cycle of Banco de México, which is expected to continue along the same path this year.
James Salazar clarified that “it is possible that it will remain in positive territory for several weeks, but the expectation continues to be of a depreciation of the peso throughout 2022, so at a certain point we will again see the net speculative positions of the peso in negative territory.” .
ariel.mendez@eleconomista.mx
