Wall Street's Dearly Beloved Mexican Peso Does Nothing But Disappoints Ye Xie and Isabella Cota - Bloomberg
go to original May 8, 2015

A detail of a Mexican 100 peso note. (Stephen Hilger/Bloomberg)

In recent years, few currencies in the world have been touted more by Wall Street than the Mexican peso. No less than the likes of Bill Gross has sung its praises.

And ever since, one thing has been constant: disappointment. Billed by strategists as a sure-fire top performer every year since 2012, the peso dropped in 2013 and 2014. This year, Mexico’s peso reached a record low, defying analysts’ predictions from December that it would gain 9.3 percent. Of the world’s 16 major currencies tracked by Bloomberg, none has fallen so short of its projections.

The peso’s story of high hopes and dashed expectations is largely a microcosm of Mexico’s economy since President Enrique Pena Nieto took power with promises to unleash unprecedented growth by jettisoning the nation’s 75-year-old oil monopoly. Latin America’s second-biggest economy is such a dud that analysts have already cut their forecasts for this year by almost a full percentage point. Just three times in the past 11 quarters has growth come in line with estimates.

“Expectations around structural reforms were overinflated,” said Juan Carlos Alderete, a currency strategist in Mexico City at Grupo Financiero Banorte. “The peso reflects the market’s attitude, which is ‘pay-per view.’ I’ll pay for it when I see it.”

At 15.2981 per dollar after falling 3.5 percent this year, the peso is now within 3 percent of the record low it reached on March 11.

Read the rest at Bloomberg

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