Templeton's Hasenstab says bet against Mexican peso 'risky'
By Jean Luis Arce
MEXICO CITY, July 27 (Reuters) - Fund manager Michael Hasenstab expects Mexico's peso to be supported by the country's solid economy and says investors who are using the currency as a proxy bet against risks in other emerging markets could be burned.
Hasenstab, chief investment officer of Templeton Global Macro, told Reuters in a recent email that he was "positive" on the peso and said "its currently undervalued status has been driven by short-term speculation and proxy hedging strategies."
The peso has been the third-worst performer among the world's 36 most-traded currencies, down around 9 percent this year, behind the Argentine peso and the British pound.
Due to its position as the most liquid emerging market currency, many investors bet against the peso when global sentiment turns sour on risky assets.
"Those types of short positions in the peso are not remotely consistent with underlying macro-economic fundamentals and they can reverse quite quickly," Hasenstab said in an emailed response to questions.
"Investors who shorted the peso to hedge other emerging market currency-risks have taken a very risky bet," he said.
Hasenstab said he has invested in Mexican debt with a maturity of less than two years.
The peso recorded its biggest monthly loss in four years in May and is down more than 3 percent this month. Continuación...