Mexican peso falls after high local inflation data
The currency retreats, also affected by fears of a possible victory by Donald Trump in the U.S. elections and the potential acceleration of Plan C.
The Mexican peso depreciates sharply against the dollar on Wednesday morning. The local currency falls due to concerns over a possible Trump victory in the U.S. elections and following a report on Mexico’s inflation showing an increase.
The spot exchange rate stands at 18.3781 units per dollar. Compared to yesterday’s close of 18.1690 units, according to the official data from the Bank of Mexico (Banxico), this represents a loss of 20.91 cents, or 1.15%.
The dollar price fluctuates within an open range with a maximum of 18.3980 units and a minimum of 18.1588 units. The Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against a basket of six currencies, was down 0.29% at 104.14 units.
Consumer prices in Mexico rose much more than expected in the first half of July, according to data from the National Institute of Statistics and Geography (Inegi), moving inflation further away from Banxico’s target of 3% +/- one percentage point.
Specifically, general inflation in Mexico for the first half of July accelerated to 5.61%, above expectations and Banxico’s target, complicating the central bank’s path to potentially cut its key rate next month.
Additionally, some analysts mentioned local political reasons as a factor in the peso’s decline, specifically referring to the possibility that proposed constitutional reforms, known as Plan C, could accelerate.
In this context, the peso recorded the second-largest decline among Latin American currencies. Investors are now awaiting U.S. inflation data on Friday, which could provide clues about the future direction of Federal Reserve rates.
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