In 2024, financial coverage for retail and institutional investors, such as Afores or investment funds, will focus on the exchange rate (peso-dollar) and interest rates, predicts José Miguel de Dios, General Manager of Mexican Derivatives. Marquette (McDear). The director of the derivatives exchange in Mexico assured that in this election year and the movement of interest rates, investors will use the exchange rate and interest rates of futures or options to cover their risks of exchange rate shocks, to pay inputs, a loan or to protect an investment.
The volatility generated by the elections in Mexico and the United States, as well as the start of the first rate cuts by central banks, will begin to generate volatility in investor portfolios. This will be a year of extreme volatility in the financial market, which increases the possibility of large swings in the assets of retirees and retail investors, mainly due to the fact that there will be presidential elections in Mexico and the USA.
Meanwhile, amid greater liquidity and broader client participation, Mexican peso futures contracts on the Chicago Mercantile Exchange (CME) Group reached record average daily volume in 2023. Continued growth in the Mexican economy combined with current interest rates is leading more clients to trade currency futures at CME Group. As client participation continues to grow, they are focused on creating and maintaining continuous liquidity that will support long-term development of electronic foreign exchange markets in Latin America. The Mexican peso ended 2023 as its best year ever with a gain of 13% against US currency closing at 16.96 units per dollar.
Bernardo Gattass explained that many large global institutional investors would benefit from adding CME Group to their lists of price providers for Latin American currencies so they can take advantage of liquidity provided by both global and local market makers. He cited examples from currency futures operations in Latin America during 2023: Mexican peso contracts reached a record $1.8 billion average daily volume equivalent benchmark while Brazilian real futures also hit a $300 million high equivalent ADV benchmark.