Jan 6 Currency speculators raised the number of
net short bets on the Mexican peso this week, again increasing
the number of contract bets that the peso will fall after a
small decrease last week.
The value of net short positions against the peso rose to
$1.55 billion dollars, data from the Commodity Futures Trading
Commission released on Friday showed.
Net short positions against the peso had risen for six
straight weeks until the week of Dec. 20 following the surprise
election of Donald Trump as U.S. president. Trump's promises to
rewrite the North American Free Trade Agreement and take a
hardline stance on immigration have sent the value of Mexico's
currency to all-time lows since the election.
This week the peso's value touched a fresh record
low, falling to 21.619 pesos per dollar.
Ford Motor Co announced on Tuesday it was scrapping a
proposed new $1.6-billion plant in Mexico and choosing to
instead build it in Michigan. Despite the company's insistence
that the change was the result of sagging demand for small cars
in North America, it stoked fears that Trump's protectionist
rhetoric could indeed pose serious threat to the Mexican
Trump said during the election campaign that if elected he
would not allow Ford to open the new plant in Mexico.
"The Mexican peso has been under depreciation pressure since
the start of the year, as increasing evidence has confirmed that
US President-elect Donald Trump will pursue protectionist
policies," Commerzbank analyst You Na Park wrote in a note to
Net short contracts on the peso fell during the last week of
2016, breaking the six-week streak, but again rose this week,
hovering just above their highest since October. Speculators
took out more than 87,000 short contracts on the peso and just
over 22,000 long contracts during the week that ended Jan. 3.
To be short a currency is to bet it will decline in value,
while being long is a view its value will rise.
(Reporting by Dion Rabouin; editing by Grant McCool)