Mexican Peso Gains in the Week’s First Session as the Dollar Weakens
The exchange rate closed the session at 19.3198 pesos per dollar, according to data from the Bank of Mexico (Banxico).
Quick overview
- The Mexican peso appreciated against the U.S. dollar, closing at 19.3198 pesos per dollar, following a decline in the dollar after Moody's credit rating downgrade.
- Moody's downgraded the U.S. credit rating to 'Aa1' from 'Aaa', raising concerns about the country's rising debt burden.
- Market participants are anticipating key GDP and inflation data to be released on Thursday, following a recent interest rate cut by Banxico.
- Banxico's Governor indicated that while further rate cuts are possible, the central bank will maintain a restrictive monetary stance for now.
The Mexican peso appreciated against the U.S. dollar on Monday, supported by a broad-based decline in the greenback following Moody’s surprise downgrade of the U.S. credit rating on Friday, and ahead of key local economic data.
The exchange rate closed the session at 19.3198 pesos per dollar, according to data from the Bank of Mexico (Banxico). Compared to Friday’s official close of 19.4746, the move represented a gain of 15.48 centavos, or 0.80%, for the peso.
During the day, the dollar traded in a range between a high of 19.4924 and a low of 19.2995 pesos. The U.S. Dollar Index (DXY), which measures the dollar’s performance against a basket of six major currencies, fell 0.71% to 100.37 points.
Moody’s Downgrade
On Friday, Moody’s downgraded the U.S. government’s credit rating to ‘Aa1’ from ‘Aaa’, citing concerns over the rising debt burden of the world’s largest economy. It was the last of the three major rating agencies to strip the U.S. of its top credit grade.
The move came amid growing worries about the high budget deficit in the United States, and was reflected in currency movements, particularly among emerging market currencies.
While the White House responded Monday by stating that President Donald Trump disagreed with the downgrade, insisting that global confidence in the U.S. economy remains strong, markets appeared unconvinced, with the dollar under notable pressure at the start of the week.
Focus on Local Data
On the domestic front, market participants are awaiting GDP and inflation data set to be released Thursday — just a week after Banxico cut its benchmark interest rate by 50 basis points and signaled the possibility of further adjustments.
Banxico Governor Victoria Rodríguez Ceja stated in an interview published Monday that while there is room for further rate cuts, the central bank intends to maintain a restrictive monetary stance for now — a position considered supportive for peso-denominated assets.
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