Mexican Peso Holds Steady After Fed Announcement

Investors are closely watching Mexico’s GDP growth report, set to be released tomorrow, as the country braces for the potential implementation of U.S. tariffs on Saturday.

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On Wednesday, the Mexican peso showed little movement against the dollar, appreciating slightly following the Federal Reserve’s first monetary policy announcement of the year and local unemployment data that support expectations of interest rate cuts.

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The exchange rate closed at 20.5370 pesos per dollar, compared to 20.5402 in the previous session, according to official data from the Bank of Mexico (Banxico). This represented a marginal 0.02% gain for the peso, less than a cent.

USD/MXN

The dollar traded within a range of 20.6660 at its highest and 20.4694 at its lowest. Meanwhile, the U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, rose 0.12% to 108.04.

The Federal Reserve announced its decision to keep interest rates unchanged at 4.50%-4.25% in a unanimous vote. During his press conference, Fed Chair Jerome Powell reaffirmed the central bank’s commitment to a 2% inflation target.

Macroeconomic Data

Currency movements in the region were mixed, with no clear signals on when rate cuts might resume. According to the CME Group’s FedWatch tool, futures markets predict that rate adjustments may not return until June.

Domestically, traders digested news that Mexico’s unemployment rate dropped to 2.4% in December, down from 2.6% a year earlier. This data supports the expectation that Banxico may continue lowering its key interest rate.

The exchange rate remains stable around 20.50 pesos per dollar in a relatively calm market following the Fed’s decision, aligning with forecasts. Investors are also looking for signals from the Trump administration as they await tomorrow’s release of Mexico’s fourth-quarter GDP report, which gains significance amid the looming U.S. tariffs set to take effect on Saturday.

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ABOUT THE AUTHOR See More
Ignacio Teson
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.
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