Background on Key Figures and Institutions
The Mexican peso appreciated against the US dollar on Tuesday, reaching its strongest level since mid-2024. This surge was driven by lower-than-expected local inflation, which bolstered expectations that the Bank of Mexico might pause its interest rate cutting cycle. Additionally, a generalized weakening of the US dollar played a role.
Monex Casa de Bolsa analysts predict the peso will trade within a range of 17.90 to 17.99 units overnight, supported by the resilience of the peso and the dollar’s weakness amid a lack of significant economic news during the upcoming trading session.
Mexican Peso’s Performance
At the close of trading, the exchange rate stood at 17.9156 pesos per dollar, marking a gain of 6.60 centavos or 0.37% compared to the previous close, according to data from Banco de México.
This appreciation brought the local currency to its best level since July 22, 2023, when it closed at 17.9408 pesos per dollar.
US Dollar’s Performance
In contrast, the US dollar index, which measures the performance of the US currency against a basket of major currencies, fell 0.34% to 97.94 points—its lowest level in over two months. The dollar weakened despite the US Gross Domestic Product (GDP) showing stronger-than-expected growth in the third quarter.
Initial estimates indicated a 4.3% increase in the GDP, significantly higher than economists’ forecast of 3.3%. This growth was fueled by robust consumer spending.
Local Inflation Data
On the domestic front, Mexico’s National Institute of Statistics and Geography (Inegi) reported that general inflation for the first half of December was 0.17%, falling short of analysts’ expectations of 0.30%. On an annual basis, inflation moderated to 3.72% from the previous 3.99%, remaining within the Bank of Mexico’s variability range.
Key Questions and Answers
- What caused the Mexican peso to strengthen against the US dollar? Lower-than-expected local inflation and a generalized weakening of the US dollar contributed to the peso’s appreciation.
- What was the US GDP growth rate for the third quarter? The US GDP grew by 4.3%, surpassing economists’ forecast of 3.3%.
- What was the annual inflation rate in Mexico for December? The annual inflation rate in Mexico was 3.72% for December, down from the previous 3.99%.
- What is the US dollar index, and what was its recent performance? The US dollar index measures the performance of the US currency against a basket of major currencies. It fell 0.34% to 97.94 points, its lowest level in over two months.
