The peso closes with gains a week that started turbulently

Mexico City. The peso ended a week of strong swings with gains, helped by a weakening dollar and fewer concerns about economic growth in the United States, while the domestic market assimilated the fact that the Bank of Mexico (BderM) cut its reference interest rate on Thursday.

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 released late last week raised fears of a slowdown in the world’s largest economy and Mexico’s main trading partner.

Disappointing US data was accompanied by a sudden revaluation of the yen, linked to changes in the Bank of Japan’s monetary policy, which caused the sharp fall in international markets last Monday. In the case of Wall Street, it was the biggest drop since 2022 and the Japanese stock market plummeted 12.4 percent, the worst session since 1987.

In this context, the peso – one of the currencies of emerging economies with the largest operations at a global level – was one of the most affected by the outflow of capital from risk markets.

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

Instability will continue

Analysts said investors are now looking to the release of 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 awaiting news on judicial reform expected to be approved in September, the presidential transition a month later, and the U.S. election in November, analysts polled by Reuters said.

There will be four or five months of volatility, I would say in a range between 17.50 and 20 (pesos per dollar)said Mauricio Fernandez, market specialist at Capital.com.

The BMV 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.

The BMV followed the trend of the New York Stock Exchange, whose main indexes closed with a slight rise in the most volatile week of the year. The Dow Jones index rose 0.13 percent; the Nasdaq, 0.51 percent, and the S&P 500 added 0.47 percent.

Oil prices rose Friday, ending the week up more than 3.5 percent as encouraging economic data and signs the Federal Reserve may cut interest rates in September eased demand concerns. Brent crude gained 50 cents to $79.66 a barrel and U.S. WTI crude added 65 cents to $76.84. Petroleos Mexicanos did not release a price quote for the blend.