Peso Continues to Decline as Investors Seek Defensive Assets Amid Middle East Conflict
On Thursday, the peso recorded further losses as investors turned to defensive assets amidst the ongoing conflict between Israel and Hamas in the Middle East. This situation has caused uncertainty in the markets, prompting investors to seek refuge in safe-haven assets.
Adding to the market’s uncertainty, the US Federal Reserve (Fed) is set to make interventions, particularly from its President Jerome Powell in a speech in New York. Investors will be closely monitoring these interventions for any hints about the future of interest rates.
At present, the peso is trading at 18.2960 per dollar, reflecting a 0.29% decline compared to the reference price set by Reuters on Wednesday. This decline accumulates losses of more than 1.2% for the week.
Banorte firm analysts note, “The dollar is operating at losses, with investors preferring safe-haven assets in the face of the intensification of diplomatic efforts to contain the conflict in the Middle East.” They additionally highlight that emerging markets are operating with mixed returns.
In parallel, the Mexican Stock Exchange (BMV) also experienced losses on Wednesday, reaching its lowest prices in nine months. The ongoing conflict between Israel and Hamas has created geopolitical tensions and diplomatic efforts in the Middle East, which have subdued the corporate reporting agenda.
Analysts from the Metaanalysis firm pointed out that the stock markets, alongside interest rates, have been the most affected by the conflict’s uncertainty. The leading S&P/BMV IPC index, representing the most traded shares in the domestic market, fell by 0.72% to 48,920.08 points. This marks its lowest level in the past nine months, dating back to January of this year.
Among the notable declines, the securities of the Grupo Carso conglomerate, owned by Carlos Slim, dropped from 2.45 to 127.15 pesos.
It remains crucial for investors to closely monitor developments in the Middle East conflict, as this will continue to impact the global financial markets.
[Information source: Reuters]
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