Peso closes a week of gains against the dollar

The peso appreciated against the dollar in Friday trading. The local currency advanced, supported by improved market sentiment regarding trade, ahead of senior US and Chinese officials meeting in Geneva on Saturday.

The exchange rate closed the day at 19.4669 per dollar, compared to Thursday's close of 19.5373, according to data from the Bank of Mexico (Banxico). This represented a gain of 7.04 cents, or 0.36 percent, for the peso.

This week, the peso registered a slight cumulative improvement, absorbing the upswing in local inflation. This figure was not enough to alter expectations for this week's Banxico announcement, where another cut in the key interest rate is expected.

Compared to a close of 19.5985 units on Friday, May 2, the currency registered a cumulative appreciation of 13.16 cents, or 0.67%, with the possibility of further gains depending on the outcome of the negotiations between China and the United States.

The Intercontinental Exchange's Dollar Index (DXY), which compares the dollar to a basket of six currencies, fell 0.29% to 100.35 points on Friday. The dollar gained 0.4% for the week, marking its third week of gains.

US President Donald Trump declared that 80% tariffs on Chinese goods "seem right," making his first suggestion of a specific alternative to the 145% tariffs currently being levied on Chinese goods.

Adding to market optimism, India offered to reduce the tariff gap with the United States to less than 4% from the current 13% in exchange for an exemption from "current and potential" U.S. tariff increases, Reuters reported.

Trump and British Prime Minister Keir Starmer reached a "grand bargain" on trade, the first since the Republican announced steep global import taxes, which he later suspended.

Optimism remains

During the week, interest in the peso maintained an upward trend. Net speculative positions on the peso increased to 68,600 contracts, up from 59,500 the previous week. This represents an increase of 9,100 contracts, equivalent to a 15.3% rise on the Chicago Board of Trade Futures Exchange.

Felipe Mendoza, Financial Markets Analyst at ATFX, explained that "this growth in confidence in Mexico may also be driven by its relative stability against other emerging currencies, an attractive rate differential, and signs of macroeconomic resilience."

He also predicted that the market perceives the Bank of Mexico will maintain a cautious stance, which strengthens confidence in the peso. (With information from José Antonio Rivera)