Mexican Peso Slides Versus Dollar After Central Bank Holds Rates
Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.28% to 97.91 points.
Quick overview
- The Mexican peso weakened against the dollar following Banxico's decision to keep interest rates unchanged at 7%.
- The exchange rate closed at 17.4079 pesos per dollar, reflecting a depreciation of 0.47% from the previous day.
- Banxico's cautious stance on inflation suggests a prolonged pause in monetary easing, with adjustments potentially resuming in 2026.
- Increased U.S. jobless claims and a stronger dollar contributed to the challenging environment for the peso.
The peso weakened as markets digested Banxico’s first policy decision of the year, which kept interest rates unchanged.
The Mexican peso retreated against the dollar on Thursday. The local currency depreciated as investors absorbed the central bank’s decision to hold its benchmark interest rate steady, in line with analysts’ expectations.
The exchange rate ended the session at 17.4079 pesos per dollar. Compared with Wednesday’s official close of 17.3267 pesos, according to the Bank of Mexico (Banxico), this represented a loss of 8.12 centavos, or 0.47%.
During the session, the dollar traded within a range of 17.2995 to 17.4659 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.28% to 97.91 points.
Banxico Decision
As expected, Banxico left its policy rate unchanged at 7%, interrupting its prolonged easing cycle. The central bank said it would assess whether to resume adjustments and pushed back its forecast for inflation’s convergence to target to the second quarter of 2027.
The decision reinforces expectations of a prolonged pause extending into the first quarter of 2026. Banxico appears committed to keeping the real interest rate near the upper end of the neutral range, amid an environment where inflation risks remain significant. Inflation continues to run above the central bank’s target—particularly core inflation—which explains the more cautious tone. While there are no signs of de-anchored expectations, the backdrop limits room for monetary easing.
Challenging Environment for the Peso
Earlier in the day, data showed that the number of Americans filing first-time jobless claims rose more than expected, partly due to snowstorms across large parts of the country. Initial claims increased to 231,000 from a prior reading of around 220,000.
This development coincided with a firmer dollar, heightened risk aversion, and a significant rebalancing across metals, equities, and cryptocurrencies—factors that further pressured the peso.
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