Puerto Vallarta (PVDN) – The Mexican peso reached its highest level in more than seven years on Friday, June 2, driven by positive employment data from the United States. The country’s stock market also experienced a notable rise as fears of a recession in the US diminished.
At the close of trading, the peso was trading at 17.5111 units per dollar, showing a 0.21% appreciation compared to Thursday’s reference price. Earlier in the day, it reached 17.415 units, a figure not seen since 2016.
The exchange rate between the US Dollar and the Mexican Peso experienced a significant shift since January. Initially, it stood at $22.00 pesos to the dollar. However, the current situation reveals a decline in the value of the dollar, losing approximately 20% against the Peso. As a result, expats relying on US Dollars while residing in Mexico have encountered a noticeable increase in their living expenses throughout the year. In certain instances, this surge has amounted to around 35%, aggravated by rising inflation and the weakening of the dollar.
The release of official labor market statistics in the United States played a crucial role in the peso’s appreciation. May’s non-farm payrolls report exceeded expectations, indicating the creation of 339,000 job positions. This surprise outcome eased concerns about a potential US economic recession, thereby boosting risk appetite in the financial market.
Gabriela Siller, the director of analysis at Banco Base, stated, “The foregoing reduces speculation that the United States economy could enter a recession, which increases risk appetite in the financial market and is positive for the economy of Mexico, its main trading partner.”
In response to the positive news, the referential S&P/BMV IPC stock index rose by 0.84%, reaching 53,168.29 points and recovering from previous losses. The gains were led by Grupo Carso, the conglomerate owned by magnate Carlos Slim, which saw a significant increase of nearly 5% to 112.05 pesos. Cement company Cemex also experienced a rise of 3.86% to 11.04 pesos.
The positive sentiment extended to the debt market as well. The 10-year bond yield increased by two basis points to 8.83%, while the 20-year debt rate added one basis point, reaching 9.10%.
These developments indicate the growing confidence of investors in Mexico’s economy, as the country’s close ties with the United States make it particularly responsive to shifts in the US market. The surge in the peso and the stock market reflect a positive outlook for trade and investment prospects between the two nations.
Analysts will continue to closely monitor economic indicators and market trends to assess the sustainability of the peso’s gains and their potential impact on Mexico’s economic growth in the coming months.
Puerto Vallarta (PVDN) - The Mexican peso reached its highest level in more than seven years on Friday, June 2, driven by positive employment data . . .
