Mexican stocks reach nearly seven-week peak as peso advances

what happened

Newsmetry API reports that Mexican equities climbed to their strongest level in nearly seven weeks on Monday, while the peso posted the biggest gain among regional currencies. The currency of Latin America's second-largest economy strengthened 0.74% to 18.25 per dollar. Crude, a major Mexican export, advanced about 2% to a high not seen for almost two weeks. The domestic equity benchmark added 1.2%, reaching its highest point since late August.

MSCI's LatAm currency index edged up 0.24%, and its regional stock counterpart gained 0.38%. Earlier, a diesel export agreement between the US and Russia, together with an energy-infrastructure truce involving Moscow and Kyiv announced by the Trump administration, limited the rise in oil prices. That restraint was countered by fears over Middle East supply after Houthi attacks on Saudi Arabia and strikes against oil tankers from the region.

The peso is still down 1.4% this year despite the oil rally. It has lagged the currencies of major regional oil exporters: the Brazilian real is up nearly 10%, while Colombia's peso has gained 19%. Chris Turner, ING's global head of markets and regional head of research for the UK and CEE, wrote that uncertainty over the United States-Mexico-Canada Agreement and whether US President Donald Trump will rejoin trade negotiations after the US midterm elections in November could leave the Mexican currency underperforming. Mexico's national statistics agency reported that industrial production rose 0.6% month over month in August and 3.5% from a year earlier.

Peru's sol slipped 0.33% to 3.44 per dollar before the release of August GDP figures later this week. Investors were also watching Brazil, where leftist President Luiz Inacio Lula da Silva and right-wing challenger Senator Flavio Bolsonaro rallied supporters before the October 25 runoff. Public holidays shut markets in Brazil, Colombia, Chile and Argentina. China sanctioned Paraguay's communications minister and Belize's foreign minister over their countries' ties with Taiwan. India's retail inflation rose to a higher-than-expected 5.54% in September, approaching the central bank's 6% ceiling as the Iran war and a weak monsoon added to price pressures. The rupee finished more than 1% higher after the local central bank introduced measures that sharply increased the cost of purchasing dollars to hedge against a decline in the currency.

why it matters

Mexican assets benefited from stronger commodities, but the peso remains exposed to US trade uncertainty and broader geopolitical risks affecting energy supply.

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