Background on the Mexican Peso and Its Recent Performance
The Mexican peso appreciated against the dollar at the start of this week, gaining ground for the sixth consecutive day and concluding its best quarter since 2020. This performance comes amidst a market focused on trade negotiations between the United States and its key partners.
Market Performance and Key Factors
On the final trading day, the exchange rate ended at 18.7654 pesos per dollar. Compared to the previous day’s rate of 18.8529 pesos, this represented an improvement of 0.46% or 8.75 centavos, according to official data from the Banco de México (Banxico).
The dollar’s movement ranged from a high of 18.8994 pesos to a low of 18.8002 pesos. Meanwhile, the Dollar Index (DXY) from the Intercontinental Exchange, which compares the US dollar to a basket of six currencies, fell by 0.64% to 96.78 units.
Strong Second Quarter Performance
Market participants anticipate further trade agreements from the United States with its major partners as the deadline set by President Donald Trump approaches. Canada, for instance, has eliminated a digital services tax as a sign of cooperation.
In this context, and with increased expectations for interest rate cuts by the Federal Reserve (Fed), the peso has advanced for six consecutive days. Compared to a record of 19.1683 pesos on June 20, the peso has recovered 40.29 centavos or 2.10% since then, pushing it to its best quarter since 2020 with an improvement of 1 peso 69 centavos or 8.28%.
Positive Outlook and Expert Opinions
Although the peso began the year under pressure from President Donald Trump’s trade policies, investor sentiment relief has led to its regained ground. Today, the peso presents a higher likelihood of continuing its advance, according to several experts.
“Today’s movement breaks through the 18.80 level, which has been respected in recent weeks. This would give it more strength to reach new yearly lows,” said Jacobo Rodríguez, a financial specialist at Roga Capital.
“The exchange rate broke below a short-term support level of 18.80, presenting its best level since August. Technically, it broke a key Fibonacci level in a 15-month downward movement and may now target the 18.50 level,” explained Juan Carlos Cruz, a financial consultant.
Peso’s Advance Not Exclusive to Mexico
While the peso’s performance is significant, it’s not exclusive to emerging currencies, nor is it the best performer: “Most emerging market currencies aim to finish this month with broad advances,” noted Cruz Tapia.
The leading currency in the emerging market bloc over the past month has been the Brazilian real. The cross showed an advance of more than 5% in June, surpassing the Mexican peso, which took second place. Year-to-date, the peso has gained 2 units and 11 centavos or 10.14% from 20.8829 pesos.
Key Questions and Answers
- What is the current performance of the Mexican peso against the dollar? The Mexican peso has appreciated for six consecutive days, closing its best quarter since 2020.
- What factors are driving the peso’s advance? Investor sentiment relief, anticipation of further US trade agreements with key partners, and expectations for interest rate cuts by the Federal Reserve are contributing to the peso’s advance.
- How does the Mexican peso compare to other emerging market currencies? While the peso has performed well, it is not exclusive to emerging market currencies, and other currencies like the Brazilian real have shown better performance.
