Sort out the weight of agitation over Trump’s victory in the US

The peso ended the week with gains, managing to overcome the turbulence caused by Donald Trump‘s victory in the presidential election in the United States last Tuesday, while investors continue to weigh the risks that the Republican’s return to the White House brings to Mexico. , who has threatened to toughen immigration policy and apply tariffs.

Although the Mexican currency fell 32 cents this Friday (1.65 percent), it gained 8 cents in the week (0.4 percent), closing in wholesale operations at 20.19 units per dollar, in addition to rising from a parity of 20.70, its worst level in more than two years, which hit between Tuesday night, when the voting trend in the United States leaned towards the Republican candidate, and on Wednesday, when his victory was confirmed as the future president of the United States, Mexico’s main trading partner, and where more than 80 percent of Mexican exports are directed.

The retreat of the peso in yesterday’s session was in line with the behavior with a weak performance shown by a large part of the assets abroad, after a new stimulus package in China failed to meet expectations, driving a general climate of exits from risk markets.

Uncertainty

Although the peso managed to overcome volatility, analyst forecasts are not entirely optimistic. If the political and economic situation continues as it is until now, the expectation is that the exchange rate will approach 21 pesos per dollar in the medium or long term.said Enrique Bazaldúa, independent foreign exchange market operator.

On the Chicago Mercantile Exchange, speculative positions in favor of an appreciation of the peso decreased, after having reached their highest level since August last week.

Analysts expect Trump’s proposals – including tariffs, measures against illegal immigration, lower taxes and business deregulation – to boost growth and inflation. However, in the short term there is uncertainty about what policies will be introduced, and whether some, such as tariffs, could be negotiating tactics.

In addition to the outcome of the contest in the United States, locally, the attention of the markets in midweek began to turn to the monetary policy announcement of Banco de México, which on Thursday cut the interest rate by a quarter of a percentage point, a day after the Federal Reserve did the same, local figures were also released that showed that, although general inflation accelerated in October, the underlying index continued to decline.

The following week will be marked by the presentation of the Mexican government’s budget package for next year, in which President Claudia Sheinbaum has the challenge of reducing the large fiscal deficit, an issue of concern among rating agencies and investors.

For its part, the reference index of the Mexican Stock Exchange fell 0.89 percent and stood at 51,845.17 points; However, during the week it added a return of 2.42 percent. Yesterday’s behavior in the Mexican stock market was contrary to that of Wall Street, where the main indices closed with gains, even the S&P 500 briefly surpassed the barrier of 6 thousand points and closed with its largest weekly increase in a year, since the overwhelming Trump’s victory boosted the stakes of a pro-business agenda.

Oil prices fall 2 percent in the session

Crude oil prices fell more than two percent, due to a decrease in fears about the passage of the hurricane Rafael through the Gulf of Mexico, while investors also weighed China’s new economic stimulus measures.

Brent lost $1.77 to $73.86 a barrel; The US WTI fell 2.01 dollars to 70.35 and the Mexican mix fell 1.68 dollars to 65.56 dollars a barrel. However, crude oil prices closed the week with a one percent recovery.