Background on the Mexican Peso and Its Recent Performance
The Mexican peso has shown signs of recovery, appreciating against the US dollar after two consecutive weeks of decline. This upswing can be attributed to a decrease in global risk aversion, particularly due to President Trump’s comments on potential tariffs against China.
Data from Banco de México (Banxico)
According to Banxico, the Mexican currency closed at 18.3899 pesos per dollar on Friday, marking a 0.23% or 4.19-centavo appreciation. This advance extended the currency’s winning streak to three consecutive days.
On a weekly basis, the peso appreciated by 0.82%, ending its two-week losing streak. Year-to-date, the peso has gained 11.94%.
The Dollar Index, which measures the greenback against a basket of six currencies, closed with a 0.55% weekly decline at 98.43 points.
Comparison with Other Currencies
Among the major currency pairings, the Colombian peso was the most appreciated, rising by 2.40%, followed by the Brazilian real (2.05%), Peruvian sol (1.62%), Hungarian forint (1.43%), and Swedish krona (0.85%).
On the other hand, the Argentine peso (3.00%), Taiwanese dollar (0.30%), Turkish lira (0.30%), Israeli shekel (0.23%), Indonesian rupiah (0.12%), and Malaysian ringgit (0.06%) were the most depreciated currencies during the week.
Experts’ Analysis on Factors Driving Peso’s Strength
Reduced Global Risk Aversion:
Analysts from Monex Casa de Bolsa stated that the peso’s improvement was driven by lower anxiety surrounding US-China trade tensions, thanks to Trump’s remarks on imposing tariffs on China. They predict the peso will trade within a range of 18.34 to 18.44 pesos per dollar, given the anticipated clarity on the trade environment and limited economic data scheduled for Monday.
Felipe Mendoza, an analyst at ATFX LATAM’s Mercados Financieros, explained that the lower global risk aversion has favored flows into emerging market currencies and Latin American assets. Meanwhile, the Dollar Index has slightly retreated, supporting the peso’s recovery.
Experts from Banco Base speculate that the United States might not enforce the 100% tariffs on Chinese imports, in addition to existing tariffs, and that the truce in tariffs, set to expire on November 10, might be extended for more months.
