The operation of the peso-dollar contracts reached last Thursday 9.2 trillion dollars in the Chicago Mercantile Exchange (CME), the Chicago futures market, with which they set a new record in the market, highlighted Jorge Alegría.
The director for Latin America of the CME explained that on a normal day the contracts amount to 1,500 million dollars. “This demonstrates the liquidity and depth of the Mexican peso in Chicago,” he commented in an interview.
The former director of the Mexican Derivatives Market (MexDer) of the Mexican Stock Exchange (BMV) commented that so far this year, the average traded peso in the CME rose and reached an average of 2,000 million dollars a day .
You have to understand that it was a record in all the Chicago markets, in interest rates, for example, due to the news from the banks, there was more activity,” he explained.
Jorge Alegría highlighted the importance of the Mexican currency in Chicago, which demonstrates the strength of the peso in international markets.
“The peso is the strongest currency in Latin America and it is used to protect itself, it is the reference to invest,” said Alegría
depreciates
After another difficult and volatile week for global financial markets due to fears of a global banking crisis, the peso weakened and posted its second weekly depreciation against the US currency.
In Friday’s session, the exchange rate closed at 18.9329 pesos per dollar, a level that represented a depreciation of 2.28% or 47.81 cents for the week ended March 17.
Regarding the daily price, the peso ended with a decline of 1.05% or 19.75 cents, reaching a maximum of 18.9884 units and a minimum of 18.6373, show data from the Bank of Mexico.
“The depreciation of the peso was mainly due to the persistence of uncertainty about the stability of the United States banking system (after the bankruptcy of three regional banks, including Silicon Valley Bank) and it is feared that there could be a paralysis of credit and the consumption, causing an economic recession”, commented Gabriela Siller, director of Analysis at Banco Base.
The foreign exchange market specialist considered that the technical indicators reflect the possibility of upward pressure on the exchange rate, although for the moment the parity continues to show a period of consolidation and stability, in a range between 18.85 and 19.00 pesos per dollar.
For Alejandro Padilla, deputy general director of Economic and Financial Analysis at Banorte, in the last two weeks there has been a “profit taking” in the peso-dollar exchange rate and although the markets recalibrated their expectations on the rate downwards Banxico terminal at 11.25%, the Mexican peso “will continue to stand out in the currency universe, having solid macroeconomic fundamentals and a positive outlook with inflows from exports, remittances, tourism and nearshoring.”
Chicago contracts down
The net speculative positions in the CME have been maintained against the Mexican peso for almost three months, from December 14, 2022 and until March 7, the latest data available.
For the period from March 1 to 7, net short contracts totaled 31,252 units each of 500,000 pesos, which meant a weekly drop of 5.2% compared to the previous record.
Janneth Quiroz, deputy director of Analysis at Monex Casa de Bolsa, explained that this data, which still shows a certain time lag, reflects that the sentiment of speculators turned slightly in favor of the Mexican currency, given the good performance registered at the beginning of this year.
“We are seeing information that reflects the sentiment of speculators when the exchange rate closed below 18 units, even so, it is striking that the positions were kept net short because there was still uncertainty about what the next decisions of the Federal Reserve and how far will the terminal interest rate take in this bullish cycle”, he commented.
Quiroz recalled that the period of the most recent published report of the peso contracts in Chicago (until March 7), the peso-dollar exchange rate quoted between 17.9499 and 18.3326 units per greenback.
It will not be until this week when the updated weekly information is presented.
Janneth Quiroz anticipated that having updated data on the peso contracts in the Chicago futures market could see a rebound and positions against the Mexican currency become more net-short.
