Mexican Peso Advances for Second Day Following Fed Announcement

The exchange rate ended the day at 18.7721 units. Compared to its closing of 18.6320 pesos yesterday.

Written by: Ignacio Teson • Thursday, August 1, 2024 • 1 min read

• Last updated: Thursday, August 1, 2024

The Mexican peso fell against the dollar in the first session of August. The local currency resumed its decline during a day of fluctuations, after appreciating yesterday on the expectation that the Federal Reserve (Fed) will cut its interest rate in September.

The exchange rate ended the day at 18.7721 units. Compared to its closing of 18.6320 pesos yesterday, according to official data from the Bank of Mexico (Banxico), this movement represented a loss of 14.01 cents or 0.75 percent for the peso.

The dollar’s price moved within an open range, reaching a high of 18.8690 units and a low of 18.4290. The Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against a basket of six currencies, advanced 0.30% to 104.41 units.

Earlier, labor market figures from the United States were released, which some analysts attributed to the peso’s loss. The weekly report on new unemployment benefit claims raised concerns about an economic slowdown.

USD/MXN

According to the data, continuing unemployment benefit claims totaled 1.877 million, above the expected 1.860 million and the previous week’s 1.844 million. New claims amounted to 249,000, the highest in 11 months.

Other analysts cited the package of controversial constitutional reforms pushed by Morena, which includes changes to the Judicial Branch, and concerns about the upcoming presidential elections in the United States as factors for the peso’s decline.

The exchange rate was heading towards 18.80 pesos per dollar in the morning, reacting to the U.S. monetary policy announcement and domestic market weakness.

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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.