The peso advanced on Friday for the third consecutive session amid a general weakening of the dollar, which partially overshadowed a series of negative local news for the Mexican currency, including a cut in the key rate and a downgrade of Mexico’s credit outlook by Moody’s.
In wholesale operations, the exchange rate concluded at 20.38 pesos per dollar, according to the closing price of the Bank of Mexico, a recovery of 4 cents for the Mexican currency. However, in the week it registered a decline of 18 cents (0.92 percent), which accumulates a weakening of 20 percent, equivalent to 3.41 pesos, so far in 2024, after having appeared until before the elections. on June 2 as one of the strongest currencies against the dollar.
Despite this trend, the official expectation is that the peso will recover ground going forward. The budget proposal for next year is that the exchange rate remains at a level of 19.70 pesos at the end of this year and heads to 18.50 per dollar at the end of 2025.
Yesterday morning the 2025 national budget project was released which, although it fulfilled the government’s promises to reduce the fiscal deficit and raised the country’s growth prospects, was described as too optimistic by some analysts.
“The economic package did not cause pain, not even the change in credit perspective and the lowering of the interest rate of Banco de México,” said Jorge González, from the consultancy Asesores en Divisas y Riesgos. “The market obeys more to the ‘Trump trade’, we are seeing a dollar that had appreciated too much and this general decline of the dollar is what is giving us a little air,” he added.
For its part, the benchmark index of the Mexican Stock Exchange (BMV), the S&P/BMV IPC, fell 0.17 percent, remaining at 50,469.40 points, marking a weekly decline of 2.7 percent.
The titles of Grupo Aeroportuario del Centro Norte led the decline of the session, with 4.46 percent less to 160.40 pesos, followed by those of the telecommunications firm Grupo Televisa, which subtracted 3.84 percent to 8.52 pesos.
The behavior of the BMV was in line with that of Wall Street, where the main indicators closed lower, a day after the president of the Federal Reserve (Fed), Jerome Powell, said that there is no need to rush the cuts in interest rates and investors reacting to US President-elect Donald Trump’s cabinet picks.
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1. What are your thoughts on the current state of the Mexican peso in the market, given its recent performance against the US dollar? How do you analyze the factors that led to the appreciation of the peso on Friday?
2. The Mexican government recently presented a 2025 national budget with optimistic expectations for economic growth and a low fiscal deficit. Do you believe this budget will be achievable, or do you see any potential risks or challenges that could derail these projections? Additionally, how do you think this budget will impact the peso’s performance in the long run?
3. The peso’s stability has been described as a result of the “Trump trade.” Can you elaborate on this phenomenon and how it might influence currency valuations in the future? What other factors should be considered when analyzing the peso’s value?
4. The Federal Reserve’s decision to maintain its interest rate policy has caused volatility in global markets, including Mexico. How could further changes in interest rates affect the peso’s performance, and what role do you see monetary policy playing in shaping the currency’s value?
5. How has President-elect Trump’s cabinet picks impacted investor sentiment towards Mexico, and by extension, the value of the peso? What other external factors could potentially influence the peso’s performance in the short to medium term?
