Mexican Peso Falls After Weak U.S. Economic Data and Banxico Rate Cut

Quick overview

The Mexican peso weakened against the U.S. dollar on Thursday as investors digested a series of economic reports from the United States and reacted to a notable interest rate cut by Mexico’s central bank.

The exchange rate closed the session at 19.5028 pesos per dollar, according to data from Banco de México (Banxico). Compared to Wednesday’s official close of 19.3892, the peso posted a loss of 11.36 centavos, or 0.59%.

During the day, the dollar traded within a range of 19.3269 to 19.5189 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against six major currencies, fell 0.26% to 100.81.

Weak U.S. Data Revives Growth Concerns

In the U.S., Thursday’s data showed that the Producer Price Index (PPI) declined in April, suggesting a slowdown in inflationary pressure. Retail sales rose less than expected, while initial jobless claims remained stable—reinforcing concerns about a potential economic slowdown in the world’s largest economy.

The peso lost bearish momentum after U.S. data reignited fears of a slowdown, which poses systemic risks for Mexico.

Banxico Cuts Rates Again

On the domestic front, Banxico announced a 50-basis-point cut to its benchmark interest rate, bringing it down to 8.5%. The decision, which was in line with market expectations, was unanimous. The central bank also signaled the possibility of further cuts ahead.

Although the rate reduction was widely anticipated, it added continued pressure on the peso. Analysts warn that if buying momentum persists, the exchange rate could push toward the 19.60 level in the medium term.

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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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