Peso setback while waiting for the BdeM rate cut

The Mexican peso weakened against the dollar this Wednesday, the eve of the monetary policy announcement of the Bank of Mexico (BdeM).

In the midst of a general advance of the dollar on a global scale, the Mexican currency registered a depreciation of 1.57 percent, equivalent to 30.29 cents, to close at 19.64 pesos per dollar spot.

The national currency registered its worst fall in almost a month and closed at a level not seen in nine days.

According to data from the Bank of Mexico (BdeM), the exchange rate operated between a maximum of 19.6540 units and a minimum of 19.4830 in the wholesale market.

Pending the decision of the Bank of Mexico – a cut in the reference rate of a quarter of a point or half a percentage point – this Thursday and in the face of doubts about whether the stimuli announced by Beijing will be enough to stimulate the Chinese economy, the risk appetite declined again.

During the session, statements by the rating agency Moody’s stood out that Mexico continues to be investment grade, despite the judicial reform and other structural changes that will be approved in the country, but there are concerns and uncertainty due to the country’s fiscal deterioration, weakness in the growth and pressure that support for Petróleos Mexicanos (Pemex) represents.

In addition, the Organization for Economic Cooperation and Development (OECD) lowered its projection on the Mexican economy for 2024 from 2 to 1.4 percent and anticipates an advance of 1.2 percent in 2025, at the start of the new six-year term.

Meanwhile, the progress of plan C continues in Congress and four days after the inauguration of Claudia Sheinbaum as president of Mexico, the exchange rate remains volatile, also with a view to the November elections in the United States, the main trading partner of Mexico, and where it is uncertain whether the winner will be Kamala Harris or Donald Trump.

For its part, the dollar index, which measures the behavior of the currency against a basket of six international currencies, appreciated 0.48 percent this Wednesday, to 100,640 units.

Meanwhile, the Mexican Stock Exchange (BMV), which gained more than 2 percent on Tuesday, closed with a loss of 0.86 percent, equivalent to 463.02 units, at 53,190.93 points. Affected by the drop in the price of Peñoles shares, 6.05 percent; Traxion, 3.26; La Comer, 2.68, as well as Bolsa, Bimbo and Inbursa, with 2.65, 2.25 and 2.23 percent, respectively.

According to market specialists, China will need more additional fiscal measures to accelerate growth, after several quarters with persistent symptoms of weakness, and thus the boost will be noticeable in raw materials and in the world economy as a whole.