Quick overview
- The Mexican peso depreciated against the U.S. dollar due to renewed risk aversion from international developments and domestic political uncertainty.
- The exchange rate ended at 19.3957 pesos per dollar, marking a decline of 0.44% from the previous day.
- Traders are cautious ahead of Mexico’s elections, where over 5,000 candidates will be elected for various judicial positions.
- Despite recent volatility, the peso appreciated 1.11% over May, supported by improved trade conditions.
Traders eye upcoming elections as market faces pressure from U.S. developments and local uncertainty.
The Mexican peso depreciated against the U.S. dollar on Friday, weighed down by renewed risk aversion stemming from international developments and political uncertainty at home. Despite closing the week with losses, the currency still posted a strong monthly gain in May.
The exchange rate ended the day at 19.3957 pesos per dollar, according to data from the Bank of Mexico (Banxico). This marks a decline of 8.41 centavos, or 0.44%, compared to Thursday’s official close of 19.3116.
USD/MXN
During the session, the dollar traded between a low of 19.2579 and a high of 19.3355 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, remained stable around 99.34 points.
Renewed Concerns
Markets reacted to fresh geopolitical tensions after U.S. President Donald Trump accused China of violating a trade agreement meant to reduce tariffs. The statement came amid stalled trade negotiations between the two countries.
Sentiment also took a hit from a U.S. appeals court decision late Thursday, which reinstated Trump’s tariffs just a day after a trade court had ruled that the president had overstepped his authority and ordered their suspension.
Multiple Sources of Pressure
On the domestic front, attention is turning to Sunday’s elections in Mexico, where voters will elect over 5,000 candidates vying for more than 840 judicial positions, including Supreme Court justices. This political uncertainty added further pressure to the peso.
Traders expect overnight trading to remain within a range of 19.33 to 19.52 pesos per dollar, factoring in dollar strength and caution ahead of the vote.
May Ends on a Positive Note
Despite this week’s volatility, which saw the peso hit its strongest level since early October at 19.1815 on Wednesday, the currency still closed May in positive territory. Compared to last Friday’s close of 19.2398, the peso lost 15.59 centavos this week, a decline of 0.81%.
However, the peso appreciated 1.11% over the month, gaining 21.79 centavos versus April’s close of 19.6136, supported by improved trade conditions and recent agreements between the U.S. and several countries.
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
