Overview of the Mexican Peso’s Recent Movement
The Mexican peso experienced a slight decline against the US dollar on Tuesday morning, despite an initial advance. This shift occurred following the release of Mexico’s inflation data, which supports expectations of further interest rate adjustments by the Bank of Mexico (Banxico).
Spot Exchange Rate and Dollar Movement
The spot exchange rate currently stands at 18.6139 pesos per dollar, marking a decrease of 4.48 centavos or 0.24% compared to the previous day’s closing rate of 18.6587 pesos, as per Banxico’s official data.
The dollar’s value fluctuates between a high of 18.7386 pesos and a low of 18.6220 pesos. Meanwhile, the Intercontinental Exchange’s Dollar Index (DXY), which measures the dollar against a basket of six reference currencies, increased by 0.09% to 97.54 points.
Local Inflation Data
Mexico’s consumer price index (CPI) rose by 0.06% in August, aligning with market expectations. On an annual basis, the CPI increased by 3.57%, slightly above June’s rate but still within the official target range of 3% ±1 percentage point.
Regarding underlying prices, the monthly inflation rate was 0.22%, surpassing expectations. Annually, the underlying inflation rate remained at 4.23%, confirming ongoing challenges in price deceleration.
“A controlled inflation environment preserves purchasing power and offers stability, but the subtle signal of pressures on underlying inflation may suggest caution,” stated Felipe Mendoza, Financial Markets Analyst at digital broker ATFX.
During the previous meeting, Banxico reduced the magnitude of rate adjustments by a quarter percentage point. According to the meeting’s minute, the governing board may consider further reductions in the future.
Peso and National Budget
The peso had briefly appreciated earlier in the morning, as markets also absorbed the presentation of Mexico City’s President Claudia Sheinbaum’s national budget proposal for the upcoming year, unveiled late Monday.
Key Questions and Answers
- What is the current state of the Mexican peso against the US dollar? The Mexican peso experienced a slight decline on Tuesday morning, despite an initial advance. The spot exchange rate is currently at 18.6139 pesos per dollar, marking a decrease of 0.24% compared to the previous day.
- What are the recent inflation figures in Mexico? Mexico’s consumer price index (CPI) increased by 0.06% in August on a monthly basis and rose to 3.57% annually, slightly above June’s rate but still within the official target range.
- How have underlying prices performed? The monthly inflation rate for underlying prices was 0.22%, surpassing expectations. Annually, the underlying inflation rate remained at 4.23%, indicating ongoing challenges in price deceleration.
- What is the recent stance of the Bank of Mexico (Banxico) regarding interest rates? Banxico recently reduced the magnitude of rate adjustments by a quarter percentage point and may consider further reductions in the future.
- What budget proposal was recently presented by Mexico City’s President Claudia Sheinbaum? President Claudia Sheinbaum presented Mexico City’s national budget proposal for the upcoming year late Monday, which influenced market dynamics alongside the peso’s movement.
