Mexican Peso Surges, Marking Its Best Week in a Month
Meanwhile, the U.S. Dollar Index (DXY) —which measures the dollar’s performance against six major currencies— slipped 0.14% to 99.57.
Quick overview
- The Mexican peso appreciated against the dollar, closing at 18.4573 pesos per dollar, marking a 0.66% weekly gain.
- This week's rally was supported by easing inflation data and a weakening U.S. dollar amid expectations of potential interest rate cuts by the Federal Reserve.
- Banxico's recent 25-basis-point rate cut to 7.25% reflects ongoing efforts to manage economic growth and inflation, which slowed to 3.57% in October.
- Investors are cautiously optimistic as they monitor the impact of lower borrowing costs on Mexico's economy and the pace of global rate adjustments.
The Mexican peso gained ground against the dollar on Friday, extending its weekly rally as investors reacted to fresh local inflation data and a weakening greenback.
The move capped a positive week for the currency, which benefited from both domestic and global tailwinds.
The exchange rate closed the session at 18.4573 pesos per dollar, according to official data from Banco de México (Banxico). Compared with Thursday’s close of 18.5647, the peso appreciated by 10.74 centavos, or 0.58%. During the day, the dollar traded in a range between 18.5885 and 18.4472 pesos. Meanwhile, the U.S. Dollar Index (DXY) —which measures the dollar’s performance against six major currencies— slipped 0.14% to 99.57.
The greenback has been under pressure in recent sessions as softer U.S. labor market data reinforced expectations that the Federal Reserve will cut interest rates in December, despite officials’ repeated warnings that it is too early to expect monetary easing.
Weekly gains for the peso
Compared with last week’s close of 18.5796 pesos per dollar, Friday’s level represented a 0.66% weekly gain for the peso. The currency has recovered steadily after touching 18.7765 on Thursday —its weakest level in two months— as investors reassessed Banxico’s recent policy moves.
On Thursday, Banxico announced a 25-basis-point rate cut, bringing its benchmark interest rate down to 7.25%. It was the 12th consecutive cut since the easing cycle began early last year, when rates stood at 11.50%. The decision, which was widely expected, came amid signs of slower economic growth and subdued inflationary pressures.
Inflation cools further in October
Earlier in the day, Mexico’s statistics agency INEGI reported that headline inflation slowed to 3.57% in October, while the core inflation rate —which excludes volatile food and energy prices— held at 4.28%, still above Banxico’s 3% target.
The data suggest that inflationary pressures are gradually easing, which could give Banxico more room to continue its rate-cutting cycle in the coming months. Analysts expect the central bank to mirror the Fed’s moves, potentially lowering the benchmark rate to 7.0% by the end of 2025 and 6.5% by late 2026.
The peso’s performance this week reflects a balance of optimism and caution: while easing inflation and a softer dollar provide short-term relief, investors remain attentive to the pace of global rate cuts and to how Mexico’s economy absorbs lower borrowing costs.
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