Mexican Peso Recovers Ground on Fed Signals
The Mexican peso regained ground this Friday, advancing after the Federal Reserve (Fed) signaled support for a potential interest rate cut in September. However, the currency couldn’t fully offset the pressures arising from concerns over the judicial reform.
The exchange rate closed the session at 19.0718 pesos per dollar, compared to 19.4791 units yesterday, according to official data from the Bank of Mexico (Banxico). This represents an appreciation of 40.73 centavos, or 2.09%.
The dollar’s price fluctuated within a wide range, with a high of 19.5329 and a low of 19.0213. The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, fell by 0.80% to 100.69 points.
In his speech at the Jackson Hole economic forum, Fed Chairman Jerome Powell stated that the time had come to adjust monetary policy, noting that the direction of the adjustment was clear, though the magnitude would depend on incoming data.
Powell’s comments led to a decline in U.S. Treasury yields, which in turn weakened the dollar and indirectly benefited the peso. However, despite four consecutive declines, the peso was unable to end the week on a positive note.
Compared to last Friday’s close of 18.6294 pesos per dollar, the peso recorded a weekly loss of 44.24 centavos, or 2.38%. Analysts attributed the peso’s weakness to various domestic factors.
On one hand, recent economic figures highlighted a slowdown in Mexico’s economy, which could prompt Banxico to cut interest rates. On the other hand, the ongoing judicial reform continues to generate unease among peso-denominated assets.
There have been signs of disapproval from the United States and Canada, Mexico’s main trading partners, regarding the reform proposed by the ruling Morena party. Meanwhile, the growing strike among workers in the sector, who have united against the proposal, is adding to the concerns.
ABOUT THE AUTHOR
See More
Sidebar rates
Add 3442
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals