SAO PAULO: The Mexican peso strengthened on Friday after the nation’s central bank governor said the currency was undervalued, on a day of quiet activity in Latin American markets.
The peso firmed 0.3 percent to 18.6 to the dollar, still weaker than the 17 to 18 pesos per dollar range Central Bank Governor Agustin Carstens considers reasonable.
The central bank has repeatedly offered dollar hedging instruments in order to cushion the currency’s recent decline, which took it to eight-month lows.
The peso has been battered by concerns that US President Donald Trump may make good on his threats to scrap the North American Free Trade Agreement (NAFTA), dealing a blow to the heavily US dependent economy.
The Mexican economy shrank for the first time in nearly two years in the third quarter after hurricanes and earthquakes pounded the country.
The central bank sees growth of up to 3 percent next year, but is concerned that the NAFTA talks could falter, which would further dent economic activity and hurt the peso.
Most other currencies in the region were near flat. The Brazilian real was the only decliner as traders booked profits on a five-day string of gains.
The nation’s benchmark Bovespa stock index treaded water, but shares of Centrais El?tricas Brasileiras SA fell after the state utility delayed a deadline to sell six power distribution firms in northeast Brazil.
Traders in Brazilian markets have erred on the side of caution as doubts linger on whether President Michel Temer will manage to pass a plan to streamline the social security system and curb public debt.
Source: Brecorder.com
