Mexican Peso Depreciates in Volatile Session; Awaits US Inflation Data

The local currency lost ground following the monetary policy announcement from Banxico on a day that also saw the introduction of new members of the incoming government’s cabinet.

The Mexican peso depreciated this Thursday in a volatile trading session. The local currency lost ground following the monetary policy announcement from the Bank of Mexico (Banxico), on a day that also saw the introduction of new members of the incoming government’s cabinet.

The exchange rate ended the day at 18.4088 pesos per dollar. Compared to yesterday’s rate of 18.3648 pesos per dollar, according to official central bank data, the peso recorded a moderate decline of 4.40 centavos, equivalent to 0.24 percent.

The dollar price fluctuated within a broad range, hitting a high of 18.4665 pesos and a low of 18.2805 pesos. The Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against six reference currencies, dropped 0.12% to 105.93 units.

Banxico announced this Thursday that, in a divided decision, it will keep its benchmark interest rate unchanged at 11 percent. It explained that the challenges on both sides of the inflation balance “warrant continuing with a prudent management of monetary policy.”

Following the decision, the peso exhibited volatile behavior, hitting the session’s high and low levels. Initially, an improvement of up to eight centavos was observed, followed by a decline that saw a loss of 10 centavos.

The risk balance remains tilted to the upside, so Banxico will continue to monitor various factors that could impact price pressures. The observed range is between 18.20 and 18.60 pesos per dollar.