Jump to content
Chapala.com Webboard

Peso Rate Alert


Recommended Posts

I don’t know enough about foreign exchanges to imply anything but if you look at the FXY you’ll see it peaked around 103 at the beginning of 2017 at the same time that the peso hit bottom.  Now we’re starting to see FXY trying to rise again but loosing steam. At the same time the peso is loosing strength not only because of dollar strength but also the trade disagreements going on. I’m just afraid the anti-AMLO crowd will use circumstantial data to attack him

Link to comment
Share on other sites

  • Replies 67
  • Created
  • Last Reply

I read two different articles  regarding the possibility of 25 by July...one in Bloomberg.. Of course certain planets have to be in line..Tariffs.... AMLO ..separate trade agreement for Canada..Trumps bowel movements..the beat goes on .Buy in July and smile..?

Link to comment
Share on other sites

On 6/5/2018 at 9:48 AM, Bisbee Gal said:

The news on NAFTA is more likely affecting the peso today.  The US is awaiting a reply from Canada from Kudlow's phone call yesterday on whether Trudeau will agree to abandon NAFTA and replace it with a separate US-CAN trade deal.  No word on whether the US called MEX last night.  

The news from Justin Trudeau is a big NO for now!

Link to comment
Share on other sites

On 6/6/2018 at 12:38 PM, utilitus said:

The most common 'dollar index to which you refer, the DXY, is composed of a basket - "Currently, this index is calculated by factoring in the exchange rates of six major world currencies the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc."  The euro comprises about 57%.  The influence (as distinct from correlation, you'd suppose) of EM currencies on the DXY and vice versa is probably small.  Bloomberg  offers a competing dollar index, the BBDXY, which some say has both a stronger statistical basis and wider international scope than the DXY.   MXN used to respond mainly to the price of oil, but now Trump is doing laps in the septic tank.  

The DXY US dollar index is trade-weighted. Which is to say that it reflects approximately the mix of currencies spent on U.S. imports. 

Link to comment
Share on other sites

This latest bout of peso weakness began on April 19th when it became clear that NAFTA renegotiations weren't going well. Since then, emerging market currencies in general have been very weak, including Turkish lira, Brazilian Real, Argentine Peso, Mexican Peso, and the Indonesian Rupiah. Generally when the Fed is raising rates (as it now is, at an ever-so-leisurely pace), emerging market currencies are the first to fall. Buying pesos on a scale, e.g., not all at once, makes a lot of sense here. 

However one should be careful as the long term history of the peso vs USD is one of near-continual depreciation. 

Link to comment
Share on other sites

KG,

My understanding is that the St. Louis Fed's 'Trade Weighted U.S. Dollar Index: Broad Index' (TWEXB - see: https://fred.stlouisfed.org/series/TWEXB ) has the formulation you describe and is indeed regarded as the preferred indication of the relative current status of the USD. See:also https://en.wikipedia.org/wiki/Trade-weighted_US_dollar_index .  

Accumulating partial positions in the MXN seems like good advice, though I do it virtually through a forex account where minute transaction costs invite what is probably senseless tweaking. 

 

Link to comment
Share on other sites

Once again this week Bloomberg explained the  existing and future problems associated with the peso US dollar exchange. Money ie pesos  are flowing out of Mexico as the Mexican wealthy and business hedge their money against the extreme possibilities that could occur. They could of course be temporary or even non existent. If  AMLO wins lots of wealthy Mexicans are scared they may have to pay appropriate taxes ,companies and entrepreneurs  have long avoided paying their fair share . Trump may separate the trade agreements with Mexico and Canada and make any agreement with Mexico contingent upon ...the Wall . The list really does go on ,it’s not really the dollar index or the basket.. it’s politics and the fact that Trump needs to pamper to his base ,and as usual Mexico is likely to get screwed.....P S to all posters who love food ,culture ,travel and the bottle drink a toast to Anthony Bourdain ..the man who best described what it takes to be a Chef ...probably one of the most misused  terms in modern day job descriptions ....As for me..it’s going to  be a long night but thankfully the bottles and the corkscrew are close......

Link to comment
Share on other sites

All this obsessive tracking of the peso exchange rate strikes me funny as I live here full time all the time.  I have to buy pesos no matter the rate, sometimes it's better, other times not so much, who cares?  Those ups and downs are just part of living here.  I consider anything over 15 gravy as the peso was 10 or 11/USD when I moved here 11 years ago.  The peso devaluation has been a bonanza for those of us that live here.

However, not so for the Mexicans.  Remember, the devaluations are very inflationary for them.  Many struggle to buy things we think are so "cheap."  So be generous in your tipping, give your help appropriate raises, give to the beggars, and donate to local charities.  Remember, Mexico has almost nothing in terms of social services that you take for granted up north.  That's why you see so many kids and others working as street vendors.  And fortunately, the poor can stand living in substandard housing because the weather is so mild most of the time.

Link to comment
Share on other sites

To me, it's like buying stocks and sometimes I win and sometimes I loose. I am doing pretty well, but greed often makes me wait to long. Now as it goes up, I  transfer a little each step. And the experts suggest that the upcoming election will cause the peso to go up higher and faster than usual, and as things stabilize go back down a ways. This time not being so greedy so far things are going well, not as well as someone with very good luck, but not bad,

Link to comment
Share on other sites

2 minutes ago, lakeside7 said:

Interestingly, if I were a Canadian I would be unhappy as to why the Loonie is in the pits, living in Mexico for them is 25%-30% higher vis the folks from the USA

Yes, but you'd still have your integrity.  And of course, any fool can own USD, and many do...

Link to comment
Share on other sites

On 6/8/2018 at 5:41 PM, lakeside7 said:

Maybe he is seeing the light at the end of the tunnel...and its a big fat CP party....Liberals took at big beating in yesterdays Ontario elections

 

On 6/8/2018 at 5:41 PM, lakeside7 said:

Maybe he is seeing the light at the end of the tunnel...and its a big fat CP party....Liberals took at big beating in yesterdays Ontario elections

 

On 6/8/2018 at 5:41 PM, lakeside7 said:

Maybe he is seeing the light at the end of the tunnel...and its a big fat CP party....Liberals took at big beating in yesterdays Ontario elections

Too bad for Ontario voting for a second Trump

Link to comment
Share on other sites

On 6/12/2018 at 1:50 PM, utilitus said:

Yes, but you'd still have your integrity.  And of course, any fool can own USD, and many do...

Canadians get a decent 15.10 for each CAD, right in line with USD/CAD exchange.

Link to comment
Share on other sites

On 6/5/2018 at 6:44 PM, Kim G said:

There's a broader swing away from emerging market currencies. Brazilian real, Turkish Lira, South African Rand, and many others have been notably weak in recent months. Eurodollar liquidity is drying up (e.g. it's harder for foreigners to borrow USD) and at this point in the cycle, global investors are beginning to be concerned about emerging markets. I have no idea where the peso is going, but my guess is that broader emerging market currencies could continue to weaken, and this will continue to pressure the peso. 

As for Mexico specifically, it is at the mercy of the Trump administration, whether we like it or not. Mexico has a relatively weak negotiating hand and Trump knows this. So whatever negotiations end up for NAFTA, it's perfectly reasonable to expect that Mexico won't get as good a deal as it had. 

All that said, if you're living in Mexico you have a continuing need for pesos, so if you buy some here, and it goes lower, you can still spend the pesos you've bought. If I were living in Mexico (which I'm not currently) I'd be thinking of buying a month or two's living expenses worth of pesos today, and then watching closely. As long as you're not planning on converting the pesos back into USD, you'll be fine even if the peso continues to drop. 

My two cents as someone who used to work in equity investments. (But not in forex)

I have been buying pesos for the last week or so. Charts showing the peso is range bound. If it breaks 21 I would load up. Having been a day trader for many years we had a saying that the news is in the charts and according to the pesos movement in the last week I don't think anyone knows what is going to happen. And I don't think that an Amlo victory is baked into the charts yet. The Nafta agreement is also the wild card since the Trump message of the minute is perhaps to scrap Nafta and negotiate with Canada and Mexico separately.

https://www.x-rates.com/graph/?from=USD&to=MXN&amount=1

 

Link to comment
Share on other sites

  • 2 weeks later...

Archived

This topic is now archived and is closed to further replies.




×
×
  • Create New...