A losing streak

The sharp depreciation in the Mexican peso in early October caused heavy losses for Mexican corporates holding foreign exchange derivatives. The country's regulator has now started an investigation into corporate disclosure. What are the implications for the derivatives market? By Ryan Davidson


Mexico was sent reeling by a massive plunge in the value of the peso in early October. With foreign investors taking fright at the possibility of a severe global recession and opting to flee emerging markets, the peso tanked by close to 20% in the first eight days of the month. The shift left corporate hedging strategies in tatters, with some Mexican companies reporting hundreds of millions of dollars in mark-to-market losses on forex derivatives positions.

As details have emerged, suspicions

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