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Mexican markets rose on Wednesday on a correction in positions, although The currency remained close to its worst level in nearly two years. after Congress approved controversial justice reform.
Investors also took note of an expected U.S. inflation report that could dissuade the Federal Reserve from aggressively cutting interest rates next week.
The currency traded at 19.7656 per dollar, up 1.64% from Reuters benchmark on Tuesday, when it fell to 20.1470, one of its worst levels since October 2022, as Mexico’s Senate was close to closing to give its approval to constitutional changes.
While the peso began to strengthen early Wednesday morning, just after the first vote on the reform, helped by a generally weaker dollar, analysts believe the recovery may be short-lived and do not rule out it heading towards 20.50 per dollar in the coming days.
“The rise in the peso should not be seen as a result of a decline in risk aversion in Mexico,” Banco Base said. “Risk aversion related to Mexico is expected to continue in the coming months, with the likelihood of upward pressure on the exchange rate increasing,” it added.
Until a few months ago, the peso was considered one of the strongest currencies against the dollar, but after the June elections, when the government’s overwhelming victory opened the door for the approval of the reform, it began a rapid decline.
It has since lost 16% and is now one of the worst-performing currencies against the dollar this year.
The benchmark S&P/BMV IPC .MXX stock index rose 0.51% to 51,235.15.
Media company Grupo Televisa TLEVISACPO.MX rose 4.72 percent to 7.77 pesos, followed by credit services specialist Gentera GENTERA.MX, which added 4.55 percent to 22.75 pesos.
In the debt market, the yield on the 10-year bond MX10YT=RR was unchanged from the previous close at 9.50%, in line with the yield on the 20-year bond MX20YT=RR, which was 9.94%.
Reuters
Source: Aristegui Noticias
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
