Chicago futures view peso pessimistically in 2021

During this year, the exchange market is betting on a strengthening of the US dollar, which will affect the peso. The reasons come mainly from the robustness of the US economy.

US President Joe Biden announced a support program for more than 2 trillion dollars and an infrastructure program for more than 3 trillion dollars in investment to reactivate the economy affected by the Covid-19 pandemic.

On the Chicago Mercantile Exchange (CME), net speculative contracts against the peso amounted to 15,100 positions, which indicates that the Mexican currency could remain lower against the dollar in the short term.

This year began with 8,200 contracts against the peso in the CME and to date they have increased 84%, a difference of 6,900 in just three months.

In February, the downward trend deepened and went from 1,000 contracts against the Mexican currency to a low of 29,500 contracts.

Eduardo Lecuona, president of Intercam, one of the most specialized banks in exchange rates, recalled that the Mexican peso is one of the most traded currencies in the world and that is why its high volatility. “Not only what happens in Mexico affects the weight,” he commented in an interview.

The expert explained that what drives the peso is the behavior of the dollar in international markets. The dollar is revalued, the peso is devalued and vice versa.

“The US economy will strengthen and that weakens all other currencies. We can expect to move up to 21-22 pesos per dollar, than to return to 19 units per greenback ”, commented Lecuona.

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Julio Escandón, general director of Banco Base, specialized in exchange rates, explained that the recommendation to his clients is to cover their needs in dollars, but not to beat the market, not to speculate.

“We are recommending short-term hedges, and long-term hedges are useless due to the volatility environment, a hedging of a maximum of three months,” and he recommended diversification to his clients.

The manager of the Monterrey bank explained that the opportunities depend on the position of the client, if he has dollars and it is expensive to take advantage of it because it can go down, although it has not been seen for a while.

Escandón was emphatic in recommending to his clients that the company’s treasury not speculate to beat the market, but to protect future transactions.

2021 against the weight

The peso, so far this year, depreciates 1.18% against the dollar and to date it is sold at 20.1850 units per greenback, 23.50 cents compared to the 19.9500 pesos in which 2021 began.

For this year, analysts surveyed by Banco de México have an expectation that the exchange rate will reach 21.90 pesos per dollar.

“We would expect an exchange rate between 20.50 and 22.5 units per dollar by the end of the year,” predicted Eduardo Lecuona.

Julio Escandón predicted that the peso will oscillate this year between 20 and 21 units per dollar, it could even fall below 20 units per United States currency.

The experts surveyed by Citibanamex estimate that the peso at the end of 2021 will be at 20.50 units per dollar.

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James Salazar, deputy director of Economic and Stock Market Analysis at CIBanco, commented that the handling of the pandemic, as well as the monetary policy in the United States will be elements that could put pressure on the Mexican currency, in addition to internal situations such as the industry reform initiatives. electricity and the electoral issue of next June 6.

“There has been a general recovery of the dollar against most currencies, the peso is always one of the most affected currencies.

Although, the negative numbers are not necessarily very bad, it is only a perception that it could depreciate more, but not in such an alarming way ”.

Carlos Hernández, stock market analyst at Casa de Bolsa Masari, said that “now the speculative positions in Chicago suggest depreciation in the peso, taking into account that they are short positions, influenced by the strengthening that the dollar has had in the exchange markets coupled with prospects investors ”.

He clarified that “in the short term volatility could decrease until more concise inflation data are available in Mexico and the United States.

“Later, a period of strengthening of the dollar could come in the exchange markets. Also in the middle of the year there is greater volatility derived from the elections at the federal level ”.

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