Overview of Recent Currency Trends
The Mexican peso has weakened against the US dollar for the second consecutive week, as reported by Banco de México (Banxico). The Mexican currency closed at 17.9836 pesos per dollar, marking a slight appreciation of 0.01% or 0.10 centavos.
In comparison to the previous week, the Mexican peso depreciated by 0.39%, marking its second week of decline due to the strengthening US dollar and cautious behavior in the foreign exchange market caused by uncertainty over the United States’ foreign policy.
Weekly Performance and Global Context
- The Mexican peso has shown a 0.14% appreciation since the beginning of the year.
- Among other currencies, the russian ruble appreciated by 1.72%, the Colombian peso by 1.65%, the Chilean peso by 1.38%, the Israeli shekel by 1.29%, the Brazilian real by 1.09%, and the Argentine peso by 0.68%.
- On the other hand, the Hungarian forint depreciated by 1.35%, the Canadian dollar by 1.29%, the Czech koruna by 1.27%, the Swiss franc by 1.07%, the South Korean won by 1.01%, and the Polish zloty by 0.79%.
- The US Dollar Index, which compares the US dollar to six other currencies, increased by 0.72% to 99.13 units.
Diego Albuja, an analyst at ATFX LATAM, stated that the Mexican peso has shown relative strength, supported by expectations of a more accommodative stance from the Federal Reserve and Mexico’s attractive interest rate differential. Despite mixed external data, the US dollar failed to gain significant traction against the Mexican peso.
Albuja further commented that this behavior suggests a more stable exchange rate environment in the short term. He anticipates that the exchange rate may continue to trade within a range of 17.90 to 18.05 pesos per dollar, offering tactical opportunities rather than strong directional movements, as long as there are no significant surprises from the United States.
The upcoming US employment report is expected to be a key driver in determining whether the dollar regains strength or if the Mexican peso maintains its positive performance in subsequent sessions.
Investor Confidence in the Mexican Peso
Investors Remain Optimistic About the Peso
Investors in Chicago are confident that the Mexican peso will continue to appreciate, and for the third consecutive week, speculative positions favoring the Mexican currency have improved.
Net long positions (speculative longs) for the Mexican peso in the Chicago Mercantile Exchange (CME) have increased for the third week in a row, from January 5 to 9. Contracts awaiting peso appreciation rose by 2.72% or 2,900 contracts, from 106,400 to 109,300.
Over the past three weeks, contracts have increased by 22,100 or 25.49%, consistent with the peso’s appreciation. Year-to-date, contracts favoring the peso have risen by 8%, totaling 8,100 units.
