The superweight exceeded 20 units per dollar in a context where all factors work against it, he reviewed Quasar Elizundiafinancial broker analyst Pepperstone.
“The Mexican currency faces an unfavorable environment marked by the inability to support the trade balance and the recent constitutional reforms approved by the Senatewhich have raised doubts about the institutional stability of the country,” the analyst estimated.
Other factors that can keep market volatility levels high are the proximity of the election in USA and the tycoon’s threats of tariffs Donald Trump, who would have a slight advantage over Kamala Harris.
Elizunia commented that the September trade deficit that
adds a fourth month in negative numbers adding to the uncertainty and rise of the Mexican currency.
“This panorama underlines the pressure on the peso, given that
Imports, especially oil, fell significantly due to the decline in prices and a reduction in domestic demand.
The trade balance, although less negative than in the previous month, has been insufficient to support the peso against the dollar in this volatile environment.”
At the local level, the economic expert highlighted that concerns about the judicial independence and the risks of institutional erosion could negatively impact the perception of country risk, affecting both investor confidence and the flow of foreign investment, with direct effects on the resilience of the Mexican peso.
All this added to the electoral uncertainty in the US, it is likely that investors will choose to take refuge in safe assets, “boosting the dollar even more and generating a challenging scenario for the peso in the
coming weeks.”
In this regard, Diego Albuja, firm’s financial markets analyst ATFX commented that staked The value of the peso has several causes; Firstly, the proximity of the presidential elections in the United States, which is increasing uncertainty in the markets.
“There is speculation about possible changes in foreign policy, especially with regard to trade agreements, and this worries Mexico, since any change could bring new tariffs or trade restrictions that would affect the flow of goods and services between the countries” .
He pointed out that there is nervousness about a possible victory for Donald Trump, who has expressed in the past a less favorable position towards trade agreements with Mexico.
At the local level, he explained that the situation economic from Mexicoor also contributes to pressure on the peso, as a deficit in the trade balance and the slowdown in foreign investment add volatility to the currency.
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Interview between Time.news Editor and Financial Analyst Quasar Elizundia
Time.news Editor: Welcome, Quasar Elizundia, thank you for joining us today. We’re witnessing some significant turbulence in the financial markets lately, especially with the Mexican peso. Can you share your insights on why the peso has recently exceeded 20 units per dollar?
Quasar Elizundia: Thank you for having me. The rise of the peso against the dollar to such levels is indeed concerning. Factors contributing to this include a challenging economic environment where the peso is struggling to maintain its value. Issues like a deteriorating trade balance and recent constitutional reforms have raised questions about institutional stability in Mexico.
Editor: That’s interesting. Could you elaborate on the constitutional reforms that are causing these doubts?
Elizundia: Absolutely. The recent reforms approved by the Senate have sparked concerns about judicial independence. This uncertainty can certainly have a negative impact on foreign investment and overall market confidence, which plays a crucial role in currency stability.
Editor: It seems like these reforms are having a significant impact. How about external factors? What role do they play in the volatility of the peso?
Elizundia: External factors are quite pronounced, especially with the upcoming elections in the United States. The rhetoric around tariffs from figures like Donald Trump, who appears to have a slight edge over Kamala Harris in public sentiment, adds to the uncertainty. Investors tend to react strongly to such potential trade disruptions, which can further exacerbate fluctuations in the peso’s value.
Editor: It sounds like a complex interplay of local and international elements. Earlier, you mentioned a trade deficit. How does this economic indicator influence the peso?
Elizundia: The trade deficit has been a significant concern, particularly as we’ve seen a fourth consecutive month of negative numbers in September. This trend has been fueled by a significant drop in oil imports due to falling prices and reduced domestic demand. Although the deficit is less severe than in previous months, it’s still insufficient to bolster the peso under current circumstances.
Editor: So, despite any improvements in the trade balance, the overall picture seems bleak. What do you think will happen moving forward if this situation continues?
Elizundia: If these trends persist without a shift in the economic environment or internal reforms to restore confidence, we could see continued pressure on the peso. Investors will remain cautious, keeping market volatility high. Long-term strategies focusing on economic stability and institutional strength will be key to reversing this trend.
Editor: Thank you, Quasar, for your valuable insights. It’s clear that both local and international factors are at play in determining the future of the Mexican peso. We appreciate you for shedding light on these complex issues.
Elizundia: Thank you for having me. It’s crucial we stay informed about these dynamics as they unfold.