Peso Closes with Losses Ahead of PCE and Mexican Elections

The dollar's price ranged between a high of 17.1395 pesos (a level not seen since the beginning of the month) and a low of 16.9076.

Ignacio Teson•Friday, May 31, 2024•1 min read

The Mexican peso erased earlier gains made during the day due to the weakening of the dollar, as investors adjusted their positions ahead of Sunday’s elections in Mexico.

On Thursday, the Mexican peso declined in trading. The local currency erased earlier gains, which were supported by a weaker dollar, as investors adjusted positions ahead of Sunday’s elections in the country.

The exchange rate ended the session at 17.0012 pesos per dollar. Compared to the official rate of 16.9557 pesos from the previous day, as reported by the Bank of Mexico (Banxico), this represents a loss of 4.55 cents or 0.27 percent for the currency.

USD/MXN

The dollar’s price ranged between a high of 17.1395 pesos (a level not seen since the beginning of the month) and a low of 16.9076. The Dollar Index (DXY), which measures the greenback against six major currencies, fell 0.32% to 104.76 points.

The dollar lost ground against its main counterparts after the release of the U.S. GDP growth data for the first quarter. The second estimate showed an increase of 1.3%, lower than the 3.4% growth in the fourth quarter of 2023.

The Mexican peso trimmed some of its recent losses due to the general weakness of the dollar, in reaction to the preliminary GDP report for the first quarter in the U.S., but with caution ahead of tomorrow’s PCE data.

However, the peso adjusted positions in the second half of the session and closed around the 17 pesos mark, in a volatile performance that some analysts attributed to caution ahead of Sunday’s Presidential and Congressional elections. Before the elections, investors remain cautious as they await the Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation measure, which is being scrutinized to determine if interest rates should be lowered this year.

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.