The Mexican peso is jumping on hope for NAFTA progress

Mexican
Foreign Minister Luis Videgaray, left, and White House Senior
Adviser Jared Kushner.
AP Photo/Luis
Alonso Lugo

The Mexican
peso rose nearly 1% on Friday after reports that the US and
Mexico were nearing a preliminary breakthrough on NAFTA, which
would bring the two countries and Canada closer to resolving
back-and-forth trade negotiations that have dragged on for more
than a year.

Reuters reports that disputes about auto rules have pushed
talks into next week, but the US and Mexico are seemingly closer
to resolving other issues. The two countries earlier this
month entered a round of bilateral negotiations for modernizing
the 2015 trade deal, which President Donald Trump has threatened
to pull out of. 

The apparent progress comes as a relief for those who feared the

July election of leftist Mexican President Andres Manuel Lopez
Obrador, who has been a tough critic of Trump, could ramp up
tensions between the US and Mexico. 

“With election uncertainty past in Mexico, prospects for a NAFTA
deal and speculation over presidential appointments matter
most,” Citi strategists led by Steven Wieting wrote in a
note Friday. 

Also on Friday, data showed Mexico’s economy stalled in the
second quarter as increasing activity in the services sector was
offset by slowing industrial and agricultural production.

Gross domestic product in Mexico declined 0.2% from the quarter
before, the
the national statistics agency said Friday, compared
with expectations for a 0.1% contraction.

Mexico’s current account deficit narrowed in the second quarter
to $3.882 billion, the central bank said in a separate
report. 

The peso is up 4.25% against the dollar this year. 

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