Overview of the Mexican Peso’s Performance
The Mexican peso appreciated against the US dollar in Friday’s trading session, gaining ground due to a weakening dollar and local inflation data release. The Mexican currency accumulated gains throughout the week as the market continued to absorb a rate cut by Banxico.
Daily Performance
The Mexican peso closed the day at 18.4573 units per dollar, compared to Thursday’s close of 18.5647 units. This represents a gain of 10.74 centavos or 0.58% for the peso, according to official data from Banco de México (Banxico).
The dollar’s price fluctuated between a high of 18.5885 units and a low of 18.4472 units. The Intercontinental Exchange’s Dollar Index (DXY) fell 0.14% to 99.57 units.
The dollar has lost strength in recent sessions following weak employment figures that reinforced expectations of a rate cut by the Federal Reserve in December, despite warnings from bank officials against anticipating an adjustment.
Weekly Gains
Compared to the previous week’s close of 18.5796 units per dollar, Friday’s record signified a gain of 12.23 centavos or 0.66% for the peso. On Thursday, the peso had reached 18.7765 units, its worst level in two months.
Additionally, Banxico’s monetary policy announcement stood out on Thursday, reducing its key rate by 25 basis points to 7.25%, marking its twelfth consecutive adjustment since the cycle of reductions began early last year, from 11.50%.
On Friday, the National Institute of Statistics and Geography (INEGI) released consumer price index figures showing a slowdown in pressure on the general index. Mexico’s inflation moderated to 3.57% in October, although the underlying index remained above the official target at 4.28%.
“We continue to expect Banxico to mirror the Fed’s actions in upcoming meetings, taking the rate to 7.0% by year-end 2025 and 6.5% by the end of 2026,” said Gabriel Casillas, head of economic research at Barclays Latam.
Key Questions and Answers
- What is the current exchange rate for the Mexican peso against the US dollar? The Mexican peso closed at 18.4573 units per dollar on Friday.
- Why did the Mexican peso gain ground this week? The peso appreciated due to a weakening US dollar and local inflation data, as well as expectations of further rate cuts by Banxico.
- What is the current interest rate set by Banxico? Banxico reduced its key rate by 25 basis points to 7.25% on Thursday, marking its twelfth consecutive adjustment.
- What are the recent inflation figures for Mexico? Mexico’s inflation moderated to 3.57% in October, with the underlying index remaining above the official target at 4.28%.
- What are analysts’ expectations for future Banxico rate adjustments? Analysts, like Gabriel Casillas from Barclays Latam, expect Banxico to continue mirroring the Federal Reserve’s actions, potentially lowering the rate to 7.0% by the end of 2025 and 6.5% by the end of 2026.
