Background on the Mexican Peso and Its Recent Performance
The Mexican peso has weakened against the US dollar in October, marking its largest decline since December 2024. This depreciation is attributed to the strengthening of the greenback, ongoing trade war between the United States and China, and various trade agreements.
Key Figures and Context
- Closing Value: The peso closed at 18.5796 units per dollar on the last trading day of October, a decrease of 0.17% or 3.2 centavos.
- Weekly Performance: The peso experienced a 0.75% decline over the week.
- Monthly Performance: In October, the national currency depreciated by 1.45%, marking its second monthly loss against the dollar this year (the first being July with 0.55%). However, October’s depreciation was the largest since December of the previous year.
- Year-to-Date Performance: The peso has appreciated by 11.02% so far in 2025, placing it in the tenth position among the most appreciated currencies.
Comparison with Other Currencies in October
In October, the peso was among the most depreciated currencies, with a 1.45% decline. Other notably weakened currencies included the Argentine peso (4.75%), Japanese yen (4.19%), British pound (2.25%), South Korean won (1.82%), Czech crown (1.80%), Danish krone (1.79%), and the euro (1.72%).
On the other hand, the Peruvian sol (2.98%), Russian ruble (2.42%), Chilean peso (2.07%), Colombian peso (1.66%), Israeli shekel (1.61%), and Malaysian ringgit (0.42%) were the most appreciated currencies.
US Dollar Index Performance
The US Dollar Index, which compares the US dollar to six other currencies, increased by 2.1% to 99.72 points in October.
Expert Analysis and Contributing Factors
Felipe Mendoza, an analyst at ATFX LATAM, explained that the peso’s weakening occurs amidst a resurgence of the US dollar. He noted that the dollar gained moderate yet solid ground in October, pushing the DXY index from 97.82 to 99.72 points, amidst monetary volatility, global economic slowdown, and geopolitical tensions sparked by Trump.
Mendoza further mentioned that the central event of the month was the Federal Reserve’s decision to cut its interest rate by 25 basis points, reaching 4%, in response to signs of cooling consumer spending and reduced labor market dynamism.
Monex Casa de Bolsa experts added that the peso was affected by a heightened risk perception due to escalating trade conflicts between the US and China, which diminished risk appetite and increased demand for safe-haven assets.
They also pointed out that following the Fed’s rate cut decision, Powell indicated that another reduction in December was not guaranteed due to limited visibility on job market and inflation progress, caused by the suspension of economic publications resulting from government shutdowns.
Key Questions and Answers
- Q: What caused the Mexican peso’s depreciation in October?
A: The weakening of the Mexican peso against the US dollar in October was primarily due to a strengthening greenback, ongoing trade war between the US and China, and various trade agreements.
- Q: How did the US Dollar Index perform in October?
A: The US Dollar Index, which compares the US dollar to six other currencies, increased by 2.1% to 99.72 points in October.
- Q: What factors contributed to the heightened risk perception affecting the Mexican peso?
A: The escalating trade conflicts between the US and China, global economic slowdown, and geopolitical tensions sparked by Trump contributed to the heightened risk perception, diminishing risk appetite and increasing demand for safe-haven assets.
