Peso Rebounds as Mexico’s Ruling Party Win Eases Political Risk Srinivasan Sivabalan - Bloomberg
go to original June 5, 2017

Mexico’s peso advanced, trading near the strongest level in seven months, as President Enrique Pena Nieto’s party forged ahead in the election for governor of the country’s largest state.

The currency reversed losses as the closely fought vote tilted in favor of candidate Alfredo del Mazo, signaling the ruling PRI will keep a stronghold vital to winning the presidential election next year. The peso was the best performer among major and emerging-market currencies, jumping 1.7 percent to 18.3764 per dollar as of 10:47 a.m. in London. The currency strengthened to as high as 18.3419 on May 25, the most since Nov. 9.

Investors are relieved that there is a clear margin of victory in the election that was seen too close to call, said Richard Segal, a London-based analyst at Manulife Asset Management. The momentum of the recovery that started in January is continuing as the worst-case scenario investors expected on the North American Free Trade Agreement hasn’t materialized, he said.

“However, it is surprising how strong the peso is given that the Nafta uncertainty hasn’t gone away and the U.S. economy doesn’t look as strong as it did three months ago,” Segal said in an interview. “Given the technical momentum, we may see further gains through the middle of this month, but beyond that, I don’t see the recovery carrying through.”

Read the rest at Bloomberg

Related: Mexico's peso undervalued, gains will counteract inflation - Cenbank (Reuters)

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