Background on the Mexican Peso and its Recent Performance
The Mexican peso concluded the week with a depreciation against the US dollar, bringing an end to its three consecutive weeks of gains. This shift in value can be attributed to the uncertainty surrounding the US government shutdown, which began on October 1st and has raised concerns about its potential impact on the US economy and that of its major trading partners.
Key Data and Expert Analysis
According to the Banco de México (Banxico), the peso weakened by 0.17%, or 3.17 centavos, closing at 18.3935 pesos per dollar on Friday. Compared to its weekly performance, the Mexican currency retreated by 0.18% against the dollar, ending its streak of three consecutive weeks of appreciation.
Despite this outcome, the peso has appreciated by 11.9% year-to-date. The US Dollar Index, which compares the US currency to a basket of six major currencies, fell by 0.45% to 97.72 points during the week.
Among the most depreciated currencies last week were the Argentine peso (-7.16%), Chilean peso (-0.55%), Turkish lira (-0.49%), Mexican peso (-0.18%), Canadian dollar (-0.13%), and Indian rupee (-0.07%).
Jesús Anacarsis López, subdirector of Analysis at Banco Base, explained that the Mexican peso was among the few currencies to lose ground due to the US government shutdown, causing uncertainty about its impact on the US and Mexican economies through trade relations.
Mexico is the primary trading partner of the United States, and a prolonged government shutdown or mass layoffs could negatively affect Mexico’s economy via exports.
Unresolved Data on Peso Positions in Chicago
Data regarding net speculative positions of the Mexican peso in the Chicago Mercantile Exchange (CME) was not updated last week, possibly due to the suspension of government services.
The latest available data shows that net long positions (favoring the peso) have been consistently increasing for five consecutive weeks, rising from 78,000 to 83,400 contracts between September 19 and 26. This represents a 6.92% increase, bringing the positions to their highest level since June 14, 2024, when they stood at 199,000 contracts.
With this outcome, the peso has experienced five consecutive weeks of growth, accumulating a 29.30% or 18,900 contract increase. Year-to-date, contracts favoring the peso have surged by 343% or 64,600 units.
Key Questions and Answers
- What caused the Mexican peso to depreciate against the US dollar? The uncertainty surrounding the US government shutdown, which began on October 1st and raised concerns about its potential impact on the US and Mexican economies, led to the peso’s depreciation.
- How has the Mexican peso performed year-to-date? The Mexican peso has appreciated by 11.9% year-to-date.
- What are the net speculative positions of the Mexican peso in the Chicago Mercantile Exchange (CME)? Due to the suspension of government services, the latest data on net speculative positions for the Mexican peso in the CME is unavailable. However, based on previous data, net long positions (favoring the peso) have been consistently increasing for five consecutive weeks.
