Markets Magazine
How Hedging and a Certain Someone Upended the Year of the Peso
Once one of the Mexican financial system's greatest strengths, the peso's liquidity has gone from virtue to liability
A street vendor sells flags and other wares as vehicles wait in line for re-entry into the United States of America on the Mexican side of the San Ysidro port of entry in Tijuana, Mexico, on Tuesday, June 7, 2016. The peso weakened, posting its biggest loss against the dollar on a closing basis in more than a month.
Photographer: Guillermo Arias/BloombergThis article is for subscribers only.
For the Mexican peso, 2016 wasn’t supposed to end this way.
At the beginning of the year, most currency forecasters agreed: The peso was grossly undervalued. Estimates compiled by Bloomberg at the time put it on course for the biggest gain among major currencies. Bank of America said things would get better; Citigroup and HSBC Holdings said they certainly wouldn’t get any worse.