Mexican markets end week of strong volatility with gains

The Mexican peso ended a week of strong swings with gains, as it was helped by a weakening dollar and less concerns about economic growth in the United States and after the Bank of Mexico cut its benchmark interest rate.

In wholesale operations, the peso closed at 18.82 units per dollar, recovering 14 cents (0.73 percent) from the previous session and 33 cents (1.74 percent) weekly.

The peso was one of the currencies hardest hit early this week by a wave of global sell-offs that briefly pushed it above the 20-unit barrier after weak U.S. employment and manufacturing data sparked fears of a slowdown in the world’s largest economy and Mexico’s main trading partner.

However, a better-than-expected report on weekly jobless claims released on Thursday helped calm the jitters, prompting a quick recovery in the Mexican currency, which ended the week with a cumulative gain of 1.74 percent.

Analysts said investors are now looking ahead to next week’s U.S. inflation and labor market figures for fresh clues about the health of the economy.

Volatility is expected to continue to rock the peso in a wide range going forward, awaiting news on the judicial reform expected to be approved in September, the transition of presidential power in Mexico a month later, and the US elections in November.

“We’re going to have four or five months of volatility, I would say in a range between 17.50 and 20 (pesos per dollar),” said Mauricio Fernández, a Latin American markets specialist at the digital group Capital.com.

At the Chicago Mercantile Exchange, speculative positions in favor of a future appreciation of the Mexican currency decreased, after two weeks of increases.

Stock market regains momentum

The Mexican Stock Exchange (BMV) also regained momentum, closing with an advance of 0.33 percent to 53,051.54 points in the session, with an accumulated weekly return of 1.5 percent.

Shares of Grupo Financiero Inbursa led Friday’s gains, up 3.24 percent to 45.27 pesos, followed by those of insurance company Quálitas, which rose 1.89 percent to 168.94 pesos.

In the secondary debt market, long-term bond yields fell to levels not seen since early April. The 10-year bond yield fell 28 basis points to 9.40 percent, while the 20-year bond yield fell 31 to 9.67 percent.