Overview of Recent Developments
The Mexican peso depreciated against the US dollar in the last trading day of the week, with the local currency losing ground due to the strengthening of the greenback and a weak local economic report. These factors extended its significant decline in October.
Currency Exchange and Dollar Performance
The exchange rate ended the day at 18.5796 pesos per dollar, marking a decrease of 3.20 centavos or 0.17% compared to the previous close of 18.5476 pesos, according to official data from Banco de México (Banxico).
The dollar’s price fluctuated between a high of 18.5966 pesos and a low of 18.5235 pesos. The Intercontinental Exchange’s Dollar Index (DXY), which compares the US currency to six strong currencies, increased by 0.18% to 99.72 points.
The peso has lost ground in the last four sessions, surpassing a key resistance level of 18.50, which it had respected multiple times. Today’s close resulted in an accumulated loss of 26.49 centavos or 1.45% compared to September’s record of 18.3147 pesos.
Strength of the Dollar
The dollar gained ground as expectations for another interest rate cut by the Federal Reserve in December diminished, following comments made by Fed Chair Jerome Powell on Wednesday. He stated that such a move was not guaranteed.
According to the official, more authorities at the central bank are now willing to postpone the rate reduction. Lorie Logan, president of the Fed of Dallas, said during a banking conference on Friday that they should not lower their rates again in December.
“The Mexican peso was affected by the strengthening of the dollar, as market operators reduced their expectations for monetary policy easing by the Reserve Board in December,” stated Monex Grupo Financiero in an analysis note.
Weak Local Economic Figures
On the domestic front, it was reported that Mexico’s Gross Domestic Product (GDP) fell 0.3% in the third quarter compared to the April-June period, with preliminary seasonally adjusted figures. In an annual comparison, the GDP decreased by 0.2%, based on original data.
“The national economy contracted 0.3% in the third quarter, mainly due to the industrial activity slump, reinforcing the perception of stagnation that could extend even into 2026,” asserted Felipe Mendoza, ATFX Latam analyst.
Key Questions and Answers
- What caused the Mexican peso to depreciate against the US dollar? The peso lost ground due to the strengthening of the US dollar and a weak local economic report, which extended its significant decline in October.
- How did the Federal Reserve’s interest rate expectations impact the peso? The dollar gained strength as expectations for another interest rate cut by the Federal Reserve in December diminished, following comments made by Fed Chair Jerome Powell.
- What were the recent GDP figures for Mexico? Mexico’s Gross Domestic Product (GDP) fell 0.3% in the third quarter compared to the April-June period, with preliminary seasonally adjusted figures. In an annual comparison, the GDP decreased by 0.2%.
