Mexican Peso Plummets as Market Lacks Liquidity
On Friday, the Mexican peso was devaluing, following the trend of other currencies in the region, on a day when no significant economic information was expected and trading volumes were quite low. The national currency traded at 20.3049 per dollar, representing a decline of 0.34% compared to Thursday's LSEG reference price, indicating it was set to close the week down by 1.3% overall.
The week starts with the dollar slightly decreasing.
According to analysts, since there were no relevant news, markets were paying more attention to the conflict in the Middle East following Israel's attacks on several targets in Yemen. Additionally, they were looking for clues about the direction of interest rates and how that would affect Donald Trump's future administration in the United States. For now, the peso was expected to fluctuate within a range of 20.21 to 20.39 per dollar, according to projections from Banco Base analysts. On the other hand, the U.S. dollar fell about 0.1% against a group of six currencies that make up the dollar index, although it was on track to finish 2024 with a total increase close to 7%, due to expectations that the U.S. Federal Reserve would proceed cautiously regarding interest rate cuts next year. “It’s normal for market activity to decrease significantly this time of year, as we approach year-end when positions need to be adjusted, along with fewer relevant economic data,” mentioned a trader.
The Mexican stock market began to rally on Friday during the early trades of a session that was expected to have low volume due to the year-end holiday period. The leading index S&P/BMV IPC .MXX, which includes the most traded stocks in the local market, rose 0.31% reaching 49,687.28 points. Shares of Kimberly-Clark de México KIMBERA.MX led the gains, increasing by 2.05% to 29.42 pesos, followed by Grupo Televisa TLEVISACPO.MX, which grew 1.42% to 7.13 pesos.
The instability of the Mexican peso can be a red flag for investors, as increased volatility may affect market confidence. In times of low liquidity, it's crucial to maintain a clear perspective on investments and to stay alert to economic news that could impact currency and stock market behavior. Staying informed is key to making sound financial decisions.
