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Super Peso Presses Dollar As Mexican Stocks Drift Near Highs
(MENAFN- The Rio Times) Key Points
Peso trades near an 11-week high around 18.22 per dollar as the dollar index sags on expectations of imminent Fed rate cuts.
The S&P/BMV IPC sits close to recent peaks, with gains led by financial and infrastructure names despite weaker growth forecasts and soft remittances.
Investors continue to reward Mexico's orthodox monetary stance, but are watching President Sheinbaum's more combative posture toward big business as a medium-term risk.
The Mexican peso is back in“super” territory, trading early Friday around 18.22 per dollar after another firm session that pushed USDMXN through the 18.24 support that had capped gains for weeks.
The move rides a broader wave of dollar weakness: the dollar index is stuck near 99 as traders price a strong chance of a Fed rate cut at next week's meeting and brace for softer US data.
Mexico's high real yields remain the core attraction. Banxico has eased its policy rate to 7.25% but, with inflation just over 3.5%, the peso still offers one of the most generous risk-adjusted carries in emerging markets.
Growth is far from stellar – the central bank now sees barely 0.3% for 2025 and remittances are slowing – yet markets appear more focused on disciplined monetary policy than on the left-leaning government's spending instincts.
Technicals underline the story. On weekly and daily charts, USDMXN is in a clear downtrend, trading below its main moving averages and hugging the lower Bollinger bands. RSI readings in the high 30s signal strong but not exhausted peso momentum.
Only the four-hour chart flashes caution, with oversold signals that could produce short-term bounces toward 18.30–18.35 if the Fed disappoints or risk sentiment sours.
Equities are echoing the cautious optimism. The S&P/BMV IPC closed Thursday near 63,700 points, a whisker below recent highs.
Winners included insurer Qualitas, infrastructure operator PINFRA and conglomerate Grupo Carso, while tequila producer Becle and airport operators GAP and OMAB lagged.
The main Mexico ETF in New York has seen solid year-to-date inflows, but recent sessions show some profit-taking as global investors rotate within emerging markets.
For now, markets are sending a clear message: they prefer Mexico's orthodox, rules-based anchors and are willing to overlook softer growth – as long as policy stays predictable and political pressure on business does not escalate into outright confrontation.
Peso trades near an 11-week high around 18.22 per dollar as the dollar index sags on expectations of imminent Fed rate cuts.
The S&P/BMV IPC sits close to recent peaks, with gains led by financial and infrastructure names despite weaker growth forecasts and soft remittances.
Investors continue to reward Mexico's orthodox monetary stance, but are watching President Sheinbaum's more combative posture toward big business as a medium-term risk.
The Mexican peso is back in“super” territory, trading early Friday around 18.22 per dollar after another firm session that pushed USDMXN through the 18.24 support that had capped gains for weeks.
The move rides a broader wave of dollar weakness: the dollar index is stuck near 99 as traders price a strong chance of a Fed rate cut at next week's meeting and brace for softer US data.
Mexico's high real yields remain the core attraction. Banxico has eased its policy rate to 7.25% but, with inflation just over 3.5%, the peso still offers one of the most generous risk-adjusted carries in emerging markets.
Growth is far from stellar – the central bank now sees barely 0.3% for 2025 and remittances are slowing – yet markets appear more focused on disciplined monetary policy than on the left-leaning government's spending instincts.
Technicals underline the story. On weekly and daily charts, USDMXN is in a clear downtrend, trading below its main moving averages and hugging the lower Bollinger bands. RSI readings in the high 30s signal strong but not exhausted peso momentum.
Only the four-hour chart flashes caution, with oversold signals that could produce short-term bounces toward 18.30–18.35 if the Fed disappoints or risk sentiment sours.
Equities are echoing the cautious optimism. The S&P/BMV IPC closed Thursday near 63,700 points, a whisker below recent highs.
Winners included insurer Qualitas, infrastructure operator PINFRA and conglomerate Grupo Carso, while tequila producer Becle and airport operators GAP and OMAB lagged.
The main Mexico ETF in New York has seen solid year-to-date inflows, but recent sessions show some profit-taking as global investors rotate within emerging markets.
For now, markets are sending a clear message: they prefer Mexico's orthodox, rules-based anchors and are willing to overlook softer growth – as long as policy stays predictable and political pressure on business does not escalate into outright confrontation.
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