Fast Slide of ‘Super Peso’ Highlights Test for Emerging Markets
- US banking risks put brakes on biggest emerging-market gainer
- 24-hour liquidity makes peso an easy place to take risk in EM
A currency exchange house in San Luis Potosi, Mexico.
Photographer: Mauricio Palos/BloombergThis article is for subscribers only.
Turmoil in the US and European banking systems is testing even the most bullish of emerging-markets cases.
Mexico’s currency — which over the past year shocked Wall Street with an astonishing rally — has seen a sharp reversal of fortunes this month. Its 24-hour liquidity left it exposed to a rapid unwind of bets on the “super peso” when investor appetite for risk soured, and it’s now lost about 2.7% of its value against the US dollar since reaching a five-year high on March 3.