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Tuesday, June 28, 2022

Trade worries fade and peso rebounds to 10-month high

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Mexico’s peso reached an almost 10-month high on Friday and investors are more optimistic about the currency than they have been in four years.

The  currency clawed its way back to pre-U.S. election levels while oil prices rose, lifting emerging market currencies.

The peso reached 18.1125 pesos per U.S. dollar, its best level since Aug. 18, but then settled to 18.17 per dollar before markets closed.

Donald Trump’s election victory provoked fears for the U.S.-Mexico trade agreement, driving the peso to record lows. But the peso has been the best-performing major currency this year, up more than 14 percent against the dollar, as the Trump administration moved toward talks to renegotiate NAFTA.

Also fueling the currency is news that inflation rates rose to an eight-year high, backing expectations of more central bank interest rate hikes. That would appeal to foreign currency investors.

The ruling party also managed to hold onto the governorship in the State of Mexico, also pleasing investors. President Enrique Peña Nieto’s PRI fended off a challenge there from a leftist party founded by populist Andres Manuel Lopez Obrador, who leads in early polls for next year’s presidential race.

Source: Reuters

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