The panic about the looming "fiscal cliff" in the U.S. has led investors to look for hedges against the government failing to avert a fall over the combination of tax rises and spending cuts scheduled for 2013.
One hedge could involve betting on the Mexican peso, according to currency strategists at Citi.
The currency has been hit by worries about the fiscal cliff in recent week. Mexico is the closest Latin American country geographically and economically to the U.S., and is the prime candidate to short if the U.S. goes into economic crisis prompted by the fiscal cliff. The currency fell by around 7.7 percent against the dollar during the near-crisis of the debt ceiling last summer.
"Mexico is the most US-centric country of Latin America and would be dragged most by a contraction in U.S. GDP," according to Citi.
"Added to the liquidity of the currency and the central bank's lack of activism, we think structures with a short exposure to MXN would benefit most from a bumpy fiscal cliff scenario.