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The Mexican weight has become an unlikely winner of Donald Trump’s commercial war, since the global risks that vanished and repeated delays to US tariffs attract investors to high performance assets in the country.
The currency was one of the great and early victims of Trump’s commercial assault, weakening to 21 pesos to the US dollar in frantic operations in early February after the announcement of 25 percent of US rates on Mexico that were then delayed.
Since then it has been recovered by just over 18.5 for backback, rather than erasing its losses from Trump’s elections, as investors take advantage of a pause in market volatility and positive commercial developments to accumulate high -performance Mexican assets. The weight has increased more than 5 percent in the last three months, so it is the best performance of a highly traded coins basket tracked by Bloomberg.
“It is perceived that Mexico has managed US relations negotiations. A little better than others,” said Derek Halpenny, head of global market research of the MUFG banking group.
Mexico and Canada have better commercial terms with the US. Uu. That most other countries thanks to an exemption from goods that comply with the United States-Mexico-Canadá USMCA commercial, which means that the vast majority of their exports enter the United States free of tariffs. On July 31, Mexico assured an extension of 90 days to the so -called Trump reciprocal tariffs for non -exempt goods, while Canada no. The Canadian dollar has earned only 1.4 percent in the last three months.
The increase in weight and other currencies, such as the Brazilian real, an increase of 4 percent in the last three months, has been fed by a rebirth of the so -called transport trade, in which investors borrow where interest rates are relatively low to buy assets where rates are higher.
Mexican assets, backed by a central bank policy rate of 7.75 percent, are a key beneficiary.
“The strength of Mexican weight and Mexican assets in general is mainly driven by the weak environment in dollars and high transport,” said Thierry Larose, debt manager of the Emerging Market of Vontobel, an investment group. In Brazil, the Real had also shrunk fiscal problems and commercial tensions of the United States, he added.
The dollar has fallen almost 10 percent against a pairs basket since the beginning of this year. A survey widely followed by fund administrators by Bank of America suggested this week that investors expected the US currency to fall further, with the dollar the largest lower position of respondents.
Currency analysts said that a fall in volatility had revived transport trade. A CME group index of expected swings in the Dollar-Peso exchange rate has fallen abruptly from its peak in November and last month it touched its lower levels since May of last year, a fall of volatility also implicit in other currency spares.
“The task trade has been very popular since volatility levels began to establish itself,” said Chris Turner, head of global market research at Bank ing.
Fund administrators said Mexico was benefiting from an avalanche of capital to emerging markets, which has helped boost the premium that developing countries pay to borrow over the performance of the country bonds developed to its lowest point since 2007.
The ten -year -old Mexican debt has been recovered since the beginning of the year, which reduces its yield to a little more than 9 percent, compared to 4.3 percent of the US Treasury bonds.
Viktor Szabo, fund manager in Aberdeen, said that a mixture of slow growth and central inflation “well behaved” had driven Mexican debt, which also benefits from the “very strong tail wind” of dollars weakness.
“United States commercial policy remains a short -term risk source,” he added. “But the concerns are somewhat mitigated by the frequent turos in Tump U about the most harmful policies.”
The government of President Claudia Sheinbaum has been in conversations about a new security pact with the Trump administration to try to weaken the violent drug cartels of Mexico. But a series of risks, including the threat of unilateral military intervention by the United States, hang on the bilateral relationship.
Vontobel had slightly lower Mexican assets in the belief that the markets were underestimating some of the most intractable problems faced by the Sheinbaum government, such as Pemex’s debts, the state oil company argued, Larose. But in American tariffs in particular, given generalized exemptions, “threats are probably a bit exaggerated,” he said.
