Mexico Peso Trades Little Changed After U.S. Presidential Debate

10/19/16 Bloomberg

peso by Guanatos GwynMexico’s peso traded in line with emerging-market peers after the third U.S. presidential debate, signaling traders saw nothing in the matchup that changed their perception of who is likely to win the election.

The currency was little changed at 18.5241 per dollar as of 6:35 a.m. in New York, paring gains of as much as 0.4 percent in the immediate aftermath of the debate. A gauge of emerging market currencies slipped 0.1 percent.

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Bank of Mexico Stresses Inflation Risk in Raising Rates

10/13/16 The Wall Street Journal 

Agustin_CarstensMEXICO CITY—The Bank of Mexico’s five board members all agreed last month that higher interest rates were necessary to stave off incipient inflation pressures amid a number of external and local risks to the Mexican peso, minutes of the meeting showed Thursday.

The board voted unanimously on Sept. 29 to raise the overnight interest rate target by a half percentage point to 4.75%, its third rate increase of the year, after the peso had again reached new lows against the U.S. dollar.

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Mexico market volatility could ease if Trump situation ‘resolves itself’: cbank governor

10/12/16 Reuters

carstensMexico’s central bank governor Agustin Carstens said on Wednesday that volatility in local markets could ease if the situation involving U.S. Republican Presidential hopeful Donald Trump “resolves itself.”

Noting that Trump has made “very specific” comments about Mexico, Carstens told local radio that “everything points to this resolving itself and let’s hope that is the case. And from then on, I expect that we could see much less volatility in our markets.”

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Mexico’s Peso Just Can’t Catch a Break as Global Risks Abound

10/13/16 Bloomberg

pesoFor investors who think calmer seas await the Mexican peso after the U.S. presidential election, the top forecaster of the currency has some bad news: The next proverbial Donald Trump is just around the corner.

The peso is poised to lose whether or not the Republican candidate makes it to the White House in next month’s vote, says Juan Carlos Rodado, director of Latin America research at Natixis North America and the most-accurate forecaster in the third quarter, according to Bloomberg rankings.

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Bank of Mexico Raises Rates to Contain Inflation

9/29/2016 The Wall Street Journal

pesomexicanoMEXICO CITY—The Bank of Mexico raised interest rates by a half percentage point Thursday, making good the expectations of most economists, in a bid to contain inflation and bolster a peso hovering near record-low levels.

The central bank led by Agustín Carstens increased the overnight rate to 4.75%. But the bank sought to reassure investors that the half-percentage-point rate increase won’t necessarily be repeated at the next meeting, saying that “it isn’t the start of a tightening cycle.”

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Why Is Mexico’s Peso Weaker Than Ukraine And Pakistan Currencies?

09/30/16 Forbes

pesomexicanoHow can it be that a country that has been growing at a percentage rate higher than the United States has a currency that is weaker than Ukraine, a frontier market that is busy fighting the Russians?

Many analysts blame the U.S. presidential election, as Business Insider pointed out on Thursday.That argument is as convenient as it is short lived. The peso has been in the tank since Mexico joined NAFTA back in 1994. Back then, one peso could purchase 32 cents. Today, the Mexican peso is worth five cents. The currency is down 12.5% against the dollar as of Thursday, while the Ukrainian hryvnia is down 7.7%. By comparison, Brazil and Russia currencies are up 18% and 13% respectively, and they are facing two years of recession and oil prices averaging under $45 a barrel.

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Wall Street Is Souring on Mexico’s Stocks as Bull Market Flags

9/30/2016 Bloomberg

stock-marketThe seven-year bull run in Mexican stocks may be coming to an end.

Strategists and investors are tempering their expectations as corporate profits slide, economic growth slows and the U.S. presidential election rattles investors. UBS AG expects a 10 percent drop in the IPC index by the end of the year. BTG Pactual cut its recommendation on Mexican stocks to underweight last week. Barclays Plc says valuations are bound to fall. This month, Mexico’s biggest stock ETF has seen the largest withdrawals in two years.

The increasingly bearish sentiment is closely tied to a rout in the peso that has made it the worst performing major currency amid prospects that Donald Trump will win the U.S. presidential election and make good on pledges to renegotiate trade accords. While the peso has recovered from record lows, international investors have been hit hard in recent weeks. The IPC index has fallen 3.4 percent in dollar terms since the Republican convention, compared with a 5 percent gain in the MSCI Emerging Markets stock index.

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