Mexican peso surpasses 19-unit barrier against the dollar

Mexico City. The peso and the Mexican Stock Exchange (BMV) fell on Friday, dragged down by an adverse climate for risk assets, following a weak report on the labor market in the United States that, while supporting expectations of an upcoming rate cut by the Federal Reserve (Fed), fueled concerns about the health of the world’s largest economy.

In wholesale operations, the exchange rate closed at 19.1624 pesos per dollar, according to the price of the Bank of Mexico. With this, the Mexican currency lost 39 cents (2.07 percent) compared to Thursday’s close, and ended with a weekly decline of 72 cents (3.90 percent), the largest since the week after the elections of June 2.

During the day, the exchange rate fluctuated between a maximum level of 19.1940 pesos per dollar – a level not seen since March 2023 – and a minimum floor of 18.9940 units against the US currency.

The Mexican currency’s fall in value came after the U.S. Labor Department released a report showing that nonfarm payrolls added 114,000 jobs in July, well below the 175,000 forecast by economists, while the unemployment rate rose to 4.3 percent from 4.1 percent in June and a three-year high.

Mexico is particularly sensitive to the economic outlook of its neighbor and main trading partner, as well as the destination of more than 80 percent of its exports.

“This morning’s report was a negative surprise for the markets,” SURA Investments said in an analysis note. “It caused nervousness regarding the health of the economy, shifting the conversation from when the Fed cuts will occur to how big they will be,” it added.

The U.S. jobs figures added to a weak manufacturing activity report on Thursday, prompting broad moves to flee risk markets globally.

At the Chicago Mercantile Exchange, speculative positions in favor of a future appreciation of the Mexican currency increased for the second consecutive week, as of July 30.

For its part, the benchmark index of the Mexican Stock Exchange, the S&P/BMV IPC, fell 0.33 percent to 52,242.38 points, with an accumulated decline of 1.1 percent in the week.

Shares of Grupo Televisa led the day’s losses, down 3.63 percent to 7.70 pesos, followed by shares of Grupo Financiero Inbursa, which fell 3.07 percent to 43.59 pesos.

In the secondary debt market, the yield on the 10-year bond fell 13 points to 9.65 percent, while the 20-year rate rose three points to 10.06 percent.