Peso Climbs After Commerce Secretary Wilbur Ross Anticipates 'Sensible Trade Agreement' With Mexico - TheStreet

The Mexican peso surged on Friday following Commerce Secretary Wilbur Ross' comments that the currency could recover "quite a lot" once a renewed trade agreement with the United States is reached.

"I think the peso has fallen a lot mainly because of the fear of what will happen with NAFTA," said Ross, whose nomination to head the Commerce Department was confirmed by the Senate on Monday, in an interview with CNBC. "If believe that if we and the Mexicans make a very sensible trade agreement, the Mexican peso will recover quite a lot."

The peso rose about 2% against the U.S. dollar early Friday morning.

Concerns over the future of U.S.-Mexico relations under the Trump administration have affected Mexico's currency significantly. The peso has fallen about 7% since Election Day, November 8. The Mexican central bank intervened at the start of the year to halt the peso's skid.

Trump often railed against Mexico on the campaign trail and has maintained his tough rhetoric since the election. He has gone after companies like Ford (F) - Get Report , General Motors (GM) - Get Report and United Technologies' Carrier for moving operations to Mexico and has said he plans to renegotiate the North American Free Trade Agreement, in effect since 1994.

Among Ross' primary tasks will be dealing with Mexico and tackling NAFTA.

Ross on Friday said NAFTA's rules of origin, which are used to determine the country of origin of a produce for international trade, are "far too lenient" and "could be tightened up a bit." He also spoke of living standards in Mexico and the United States.

"The minimum wage for the peso has barely gone up in peso terms, and since the peso has gone down so severely in dollar terms, Mexican workers are really not at all better off than they had been some time ago," he said.

He acknowledged that the peso's decline is tied in part to concerns about NAFTA but added he thinks there's more to it.

"We also need to think about some other mechanisms for making the peso-dollar exchange rate a bit more stable," he said.

Ross, 79, will form a sort of trade triumvirate alongside Peter Navarro, director of the National Trade Council, and Robert Lighthizer, Trump's U.S. Trade Representative nominee. He discussed the administration's take on trade on Friday.

"We'll be aggressive on trade because we know that the deals that have been made historically have resulted in the great loss of manufacturing jobs, great amount of closures of manufacturing businesses. We don't want that to continue," Ross said on Friday. "First emphasis will be on facilitating U.S. exports to other countries, getting rid of both tariff and non-tariff barriers to trade. The other side of that will be preventing illegally subsidized goods from coming in and really enforcing it."

TheStreet's forex columnist Douglas Borthwick wrote recently that the dollar looked poised to fall. Click here to read his take, or here to view a roundtable discussion he had this week with Jim Cramer and our other "Trading Strategies" experts.