The Mexican Peso Gains Ground Following a Rate Cut
The Mexican peso gained ground against the dollar on Thursday, rebounding from a weak start as markets digested the latest monetary policy update from the Bank of Mexico (Banxico).
The exchange rate closed at 20.2984 pesos per dollar, improving from the previous day’s official close of 20.3720, according to Banxico data. This represents a gain of 7.36 centavos, or 0.36%. During the session, the pair traded in a range between a high of 20.5115 and a low of 20.2920 pesos in the USD/MXN.
Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against six major currencies, rose 0.30% to 108.35 points.
Banxico announced its decision to cut the benchmark interest rate by 25 basis points to 10%, a move in line with market expectations. The central bank also signaled that, given the current inflationary environment, further rate reductions might occur next year.
The rate cut reflects Banxico’s careful balancing act between controlling inflation and supporting economic growth in a challenging context. The central bank remains vigilant, closely monitoring economic data to guide future decisions.
Federal Reserve Policy Outlook
This move follows the U.S. Federal Reserve’s decision to also lower its interest rates by 25 basis points on Wednesday. However, the Fed hinted at fewer rate cuts than previously anticipated for next year, boosting the dollar and putting pressure on other currencies earlier in the week.
The peso’s recovery underscores market confidence in Banxico’s policy direction and its ability to navigate a complex economic landscape.
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