The Mexican peso is trading lower on Thursday, losing ground against the dollar.

Later today, Banxico will announce its monetary policy decision. It is highly likely that the authority will cut its key interest rate by 25 basis points to 11%, marking the first decrease since mid-2021.

On Thursday, the Mexican peso is trading lower. The local currency is retreating against the dollar, a day after the United States Federal Reserve (Fed) kept its interest rates unchanged, and ahead of the local monetary policy announcement.

The spot exchange rate stands at 16.7467 units per dollar, compared to an official close of 16.6729 units yesterday, according to data from the Bank of Mexico (Banxico). This represents a setback for the local currency of 7.38 cents, equivalent to 0.44 percent.

The dollar price is fluctuating within an open range, reaching a maximum of 16.7710 units and a minimum of 16.6688 units. The Dollar Index (DXY), which measures the greenback against six major currencies, is up marginally by 0.04% at a level of 103.88 units.

Yesterday, the Fed kept its interest rates unchanged, within a range with a maximum of 5.50 percent. However, the dot plot suggested the possibility of three cuts during the year. As a result, the dollar stabilized after its decline yesterday, while the peso fell awaiting the local announcement.

Later today, Banxico will announce its monetary policy decision. It is highly likely that the authority will cut its key interest rate by 25 basis points to 11%, marking the first decrease since mid-2021 when the rate hikes began.

If expectations are met, some pressure on the currency might be observed as the interest rate differential between Mexico and the United States slightly narrows; conversely, if the rate remains unchanged, the peso could appreciate towards 16.60.