US dollar hits another record against the peso
The market is laser-focused on the coronavirus crisis in developed markets right now. It's understandable because the newsflow is just overwhelming and the fear is real.
The optimists are talking about how the US could maybe start to turn the corner on the virus by the end of April.
What that misses is that emerging markets are also going to be facing this. it's a global pandemic and the demand destruction everywhere is going to be unprecedented.
So why Mexico? It's down 4.05% today, the worst of emerging market currencies. Mexico has some oil production but the Hacienda Hedge is proving to be the this year's greatest trade.
Moreover, people on the streets in emerging markets are going to go into domestic cash, they're going to be hoarding US dollars. What I think is happening is that Mexico and Mexicans are simply ahead of the game here. Maybe it's the proximity to the US.
I believe demand for dollars in the coming months is going to be overwhelming from emerging markets.
