Mexican Peso’s Slump Is Opportunity to Buy, According to NomuraBy
Nomura forecasts peso will gain to 17.5 per dollar by yearend
Berber cites FiveThirtyEight report that Trump losing ground
The Mexican peso’s plunge Thursday, the biggest in emerging markets, represents an opportunity to buy, according to Nomura Holdings Inc.
The currency lost 1.5 percent to 18.6496 per dollar as of 3:24 p.m. as assets from developing nations slipped after European Central Bank President Mario Draghi downplayed the need to extend a stimulus program that has propped up demand for riskier assets.
The peso’s drop seems overdone to Benito Berber, the senior economist for Latin America at Nomura in New York, who says the currency is unduly suffering because of its use as a proxy for overall market risk and that it should appreciate to 17.5 per dollar by the end of the year. While some investors have been shorting the peso on concern that a Donald Trump presidency would be bad for Mexico, polls show that isn’t the most likely scenario, Berber said.
“With Trump’s probability of winning dropping” to 29 percent from 33 percent to 28 percent in the most recent tracker from FiveThirtyEight “these levels seem perfect entry points,” Berber said.