The Mexican peso slipped against multiple currency rivals to kick off the trading week as weak industrial output, fixed investment, and consumer confidence impacted the currency. Despite the disappointing numbers, the central bank anticipates the economy to record a strong first quarter. Is this enough to lift the peso?
Consumer confidence clocked in at 43.4 last month, unchanged from December. The bearish consumer sentiment remained at the lowest level since July as businesses and households maintain a less favorable opinion of the countryâs economy.
November industrial production edged up 0.8%, up from the 1.5% decline in October. However, year-on-year, industrial output has contracted 2.1% as manufacturing and construction continue to hammer the industry. Utilities edged up slightly, but the real gains were situated in mining, which reported its first gain since September 2018.
In October, gross fixed investment tumbled 1.5% for the ninth straight month, down from the 1.1% drop in September. YoY, gross fixed investment has fallen 8.6%, driven by declines in private investment in construction, machinery, and equipment.
Amid these disappointing figures, the Bank of Mexico head believes the national economy will improve in the January-to-March period this year.
Speaking at the ITAM Seminar on Economic Perspectives in 2020, Alejandro Diaz de Leon posited that financial conditions have been relaxed and that the federal government has taken appropriate measures to combat corruption and violence and boost citizensâ rights. In addition, he also thinks that the USMCA being ratified in the US and monetary easing in the form of cuts to interest rates will help ignite confidence in the Mexican economy.
The USD/MXN currency pair rose 0.02% to 18.7934, from an opening of 18.7930, at 19:45 GMT on Monday. The EUR/MXN climbed 0.12% to 20.9320, from an opening of 20.9030.
If you have any questions, comments, or opinions regarding the Mexican Peso, feel free to post them using the commentary form below.
