Trade Negotiations and Market Sentiment Drive Peso’s Advance
The Mexican peso appreciated against the US dollar on Friday’s trading session. The local currency advanced, supported by a more positive outlook on trade before high-level officials from the United States and China meet in Switzerland over the weekend.
Key Market Developments
- Trade Optimism: President Donald Trump suggested that an 80% tariff on Chinese products “sounds right,” marking his first specific alternative to the current 145% tariffs on Chinese goods.
- India’s Trade Offer: India proposed reducing its tariff gap with the US to less than 4% from nearly 13%, in exchange for exemption from potential US tariff increases, according to Reuters.
- US-UK Trade Agreement: President Trump and UK Prime Minister Keir Starmer announced a significant trade deal, the first since Trump’s announcement of strong global import tariffs, which he later suspended.
Weekly Performance
Throughout the week, the peso experienced a slight overall improvement, absorbing local inflation’s uptick. The inflation data wasn’t enough to change expectations for the upcoming Bank of Mexico (Banxico) rate announcement, where another interest rate cut is anticipated.
- Compared to last Friday’s close of 19.5985 pesos, the currency has accumulated an increase of 13.16 centavos or 0.67%, with potential for further gains depending on the outcomes of the China-US negotiations.
Renato Campos Santana, an analyst at Squared Financial, explained: “The pair threatens to break the sideways range support at 19.47, with resistance at 19.76. Given the downward momentum and fundamental background, the likelihood of a decline appears greater.”
Key Questions and Answers
- Q: Who are the key figures mentioned in the article? A: The key figures mentioned are US President Donald Trump, UK Prime Minister Keir Starmer, and unnamed Indian officials.
- Q: What developments have contributed to the peso’s advance? A: The peso has gained ground due to optimism surrounding trade negotiations between the US and China, as well as India’s proposal to reduce tariffs on US goods.
- Q: How has the Mexican peso performed this week? A: The Mexican peso has experienced a slight overall improvement, accumulating a 0.67% gain compared to last Friday’s close.
