Declines on the Mexican Pesos. How to play with this "unknown" currency?

The Mexican Peso is a currency that is in the top five when it comes to trading on CME, also although quite exotic for us, it is incomparably more popular than our native Zloty.

The Mexican peso is included in the "good" currencies of emerging markets. The main reason for this classification is the positive perception of the reform package under the title "Pacto de Mexico" by investors. Mexico as one of the few developing countries understands the need for structural reforms, and government representatives together with opposition parties develop a joint action plan for the development of their country.

President Enrique Peña Nieto. Source: Wikipedia

President on Monday Enrique Peña Nieto presented a package of proposals for changes in the energy market. It concerns, among other things, the possibility of extracting oil / gas in Mexico by private foreign companies (but in a joint venture with the state-controlled conglomerate Pemex), which is related to the amendment to the Constitution, which prohibits this type of activity by foreign companies in Mexico. Private companies will not be able to carry out activities consisting in the transmission or distribution of electricity, but it will be possible to draw profits from energy generation to wipe away tears. Commentators suggest that Mexico's offer is similar to the Iraqi one, while a country such as Brazil allows investors to operate much wider - experts say there is no possibility of acquiring concessions for oil / gas fields. In response to the package of proposed changes, the Mexican peso depreciated, deepening the fall after yesterday's US retail sales data.

It should be noted that since 1938 no activity of private companies in the field of the energy market was possible, therefore the changes should be received positively. However, part of the market could expect even more. Back below trend lines decline will be a sign of another wave of peso appreciation.

Source: Dominik Rożko, mBank Investment House