BRASILIA: The Mexican peso firmed sharply on Tuesday after the newly elected president, Andres Manuel Lopez Obrador, sought to assuage investors, magnifying a global bounce in emerging market assets.
Obrador, who cruised to victory over the weekend as the first leftist elected president since one-party rule ended in 2000, has strived to dispel fears he might be averse to private investment when he takes office on Dec. 1.
One of his advisers on Monday told Reuters the election win would jumpstart negotiations on the North American Free Trade Agreement, and that an agreement was possible before his government takes power in December.
“We think at current levels, most of bad news regarding NAFTA and presidential elections are priced in the Mexican peso,” Bank of America Merrill Lynch wrote in a report. “The currency is close to fairly valued and positioning is more balanced.”
The peso firmed 2.53 percent, by far the biggest gainer among Latin American currencies, as improved sentiment over Mexico helped to magnify an emerging markets rally.
Mexico’s benchmark stock index was also up 0.89 percent.
“The guidance up to now is consistent with what the market would like to see or hear,” said James Salazar, an analyst with CI Banco.
Higher-risk currencies had suffered in recent days because of the threat of a full-blown trade war between the United States and China, sending the yuan on a tailspin that reportedly forced China into intervention via state-run banks.
A Chinese central bank adviser was also quoted as saying authorities did not expect significant yuan depreciation, which helped the yuan reverse early losses to move back into positive territory, supporting other emerging market currencies.
In Argentina, the benchmark stock index soared 6.66 percent as investors began to buy back the stock after major losses.
“As long as the government fails to stabilize the exchange market, the market in general will continue to show marked oscillations,” an investor said.
Source: Brecorder
