Background on Key Figures and Relevance
The Mexican peso began the week trading at 19.08 units per dollar in Asian markets, bolstered by the weakening US dollar on the international stage. This situation is largely attributed to the protectionist trade policies implemented by US President Donald Trump, according to financial experts.
Experts’ Analysis
Gabriela Siller, Director of Analysis at Banco Base, concurs with this assessment. She highlights that the US’s protectionist stance, including recent tensions with China over trade agreements, has contributed to the dollar’s weakness.
Market Futures and Predictions
Futures contracts for the peso on the Chicago Mercantile Exchange have improved from 61,400 to 64,400 contracts favoring the Mexican currency. Banorte anticipates a possible reversal in market discount for Fed rate cuts following the positive May employment report.
Impact of US Economic Conditions
Banorte estimates that, by year-end, the peso could reach 20.10 units per dollar and 19.30 units by the end of 2026, given current economic conditions in the US. The bank emphasizes that changes in US foreign policies, particularly trade fronts, contribute to the dollar’s weakening.
Dollar Index and Global Hegemony
The Dollar Index, measuring the US dollar against a basket of six major currencies, stood at 98.96 points on Friday—a decrease of 0.23%. Banorte predicts it could drop to 94 points, indicating further dollar depreciation.
Mexico’s Relative Strength and Trade Certainty
Experts underscore that Mexico’s strong relative position and potential trade certainty serve as the primary supports for renewed optimism towards Mexican assets in 2026. They also note that the dollar’s global reserve currency status and dominance are unlikely to be significantly affected by US issues, despite central banks’ increasing purchases of gold as an alternative to the dollar.
Mexican Peso Performance in Asia
In electronic trading in Asia, the Mexican peso appreciated by 0.11% to reach 19.0847 units per dollar, compared to the previous close by Banco de México (Banxico) on Friday. This marked the peso’s best level since August 23, 2024, when it was valued at 19.0718 units.
Currency Performance Comparison
- Among major currencies, the Brazilian real appreciated by 2.85%, the South Korean won by 1.50%, the South African rand by 1.24%, the Chilean peso by 1.14%, and the Colombian peso by 1.03%.
- The Russian ruble, Peruvian sol, Japanese yen, Polish zloty, Swedish krona, and Taiwanese dollar depreciated by 1.91%, 0.88%, 0.58%, 0.46%, 0.44%, and 0.16%, respectively.
Weekly Economic Indicators and Speculation
Last week, US economic indicators were released, fueling speculation that the Federal Reserve might cut interest rates by 25 basis points on September 17. The peso regained strength due to expectations of a trade resolution between Mexico and the US.
Market Speculation and Expert Pronostications
Speculators bet on peso appreciation against the dollar in Chicago, while experts predict that the Mexican currency could fall below 19 units per dollar.
Key Questions and Answers
- Q: What factors are contributing to the Mexican peso’s strength? A: The weakening US dollar, driven by protectionist trade policies under President Donald Trump, and expectations of a favorable trade resolution between Mexico and the US are bolstering the peso.
- Q: How are US economic conditions affecting the Mexican peso? A: Current economic conditions in the US, including potential Fed rate cuts and trade tensions, contribute to the peso’s relative strength.
- Q: What do experts predict about the peso’s future value against the dollar? A: Experts anticipate that the Mexican peso could weaken and trade below 19 units per dollar, given ongoing developments in US policies and global market dynamics.
