Mexican Peso Falls Following Federal Reserve Policy Announcement
Although the Fed made no changes to rates—unanimously—the market's attention quickly shifted to expectations for future policy moves.
Quick overview
- Traders are closely monitoring escalating tensions between Israel and Iran, alongside statements from U.S. President Donald Trump directed at Iran's supreme leader.
- The Mexican peso experienced a slight decline against the U.S. dollar, closing at 19.0355 pesos per dollar, a depreciation of 0.11%.
- The Federal Reserve maintained its benchmark interest rate at 4.25% to 4.50%, with expectations of potential rate cuts later this year.
- Iran's Supreme Leader Ayatollah Khamenei rejected Trump's demands, asserting that Iran will not take orders from the U.S.
Traders remain focused on the escalating tensions between Israel and Iran, as well as on the latest statements from U.S. President Donald Trump directed at Iran’s supreme leader.
The Mexican peso posted a slight decline against the U.S. dollar in midweek trading. The local currency weakened as markets digested the Federal Reserve’s monetary policy announcement, while keeping a close watch on geopolitical developments in the Middle East.
The exchange rate closed the session at 19.0355 pesos per dollar, compared to 19.0145 in the previous session, according to official data from the Bank of Mexico (Banxico). This marks a depreciation of 2.10 centavos, or 0.11%, for the peso.
The dollar traded within a range of 18.9436 to 19.0478 pesos during the day. Meanwhile, the U.S. Dollar Index (DXY)—which measures the dollar against a basket of six major currencies—rose 0.05% to 98.87.
Fed Holds Rates Steady
The Federal Reserve left its benchmark interest rate unchanged, holding it at 4.25% to 4.50%, as widely expected. During his post-announcement press conference, Fed Chair Jerome Powell noted that inflation is likely to rise this summer due to the new tariffs.
Although the Fed made no changes to rates—unanimously—the market’s attention quickly shifted to expectations for future policy moves. Current outlooks still suggest the possibility of two rate cuts later this year.
Geopolitical Tensions
On the geopolitical front, Iran’s Supreme Leader Ayatollah Ali Khamenei rejected President Donald Trump’s public demand for surrender. In a televised speech, Khamenei warned that Iran “will not take orders” from the United States.
The peso-dollar exchange rate remains hovering around the 19.00 level, constrained within a high-volume trading range of 18.90 to 19.05. Moving forward, markets are expected to remain highly sensitive to developments in Middle East tensions.
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