Hedge funds have decreased their net long positions on the Mexican peso by 56,709 contracts following the country’s unexpected election of Morena’s Claudia Sheinbaum, bringing the total down to 27,304 contracts, according to a report by Bloomberg.
According to the Commodity Futures Trading Commission, this marks the third-largest reduction since the US agency began tracking such data in 2006.
Additionally, asset managers scaled back their bullish bets to 76,520 contracts, the lowest level seen in nearly two years.
Since the election on 2 June, the peso has declined more than 6% against the US dollar, underperforming all other developing-nation currencies during this period, although it has recently regained some of its losses.
Speaking to Bloomberg, Benito Berber, chief Latin America economist at Natixis, described it as “a massive clean up” of long positions, adding that “the potential negative impact of a judicial reform on the investment climate and the passage of additional anti-market reforms by a Morena-dominated Congress” were some of the risks.
