Increase Speculation in Favor of the Peso

Speculative net positions on the peso increase to 88,418 contracts in the Chicago futures market as of March 5, accumulating 11 weeks in favor. This has given stability to the exchange rate in recent months.

Long positions (in favor of the peso) stand at 176,942 contracts, the highest number of longs in history.

The main reason is that Banco de México offers an interest rate of 8.25%, equivalent to a real rate of 4.3% (considering inflation in the last 12 months).

No major country offers a real interest rate as high as Mexico. This makes public debt attractive to foreign investors, so that capital flows continue to arrive in the country, giving stability to the exchange rate.

However, shorts (positions against the peso) increase to 88,524 contracts, the highest volume since September 2018.

It seems that there is a polarization among speculators. On the one hand, the large premium offered by the rates in pesos attracts bets in favor of the Mexican currency, while a greater risk due to the policies of the new government generates the sale of pesos.

Rates vs. Risk are the variables that will define the speculators' game.