Mexican Peso Rises for a Third Consecutive Day Ahead of Banxico Announcement

Markets are still digesting Powell’s cautious tone, particularly his indication that the Fed is in no rush to cut interest rates.

Written by: Ignacio Teson • Thursday, June 26, 2025 • 2 min read

• Last updated: Thursday, June 26, 2025

Quick overview

The Mexican peso appreciated against the U.S. dollar for the third consecutive day, closing at 18.9244 pesos per dollar.
This gain of 0.36% follows easing market jitters after the de-escalation of the Israel-Iran conflict.
Federal Reserve Chair Jerome Powell's cautious testimony influenced market sentiment, emphasizing the need to manage inflation risks.
Attention is now on the Bank of Mexico's upcoming monetary policy decision, with expectations of a potential 50 basis-point rate cut.

The Mexican peso appreciated against the U.S. dollar on Wednesday, marking its third consecutive day of gains. The rally comes amid easing market jitters following the de-escalation of the conflict between Israel and Iran, which had rattled global investors in recent days.

The exchange rate closed the day at 18.9244 pesos per dollar, compared to 18.9930 on Tuesday, according to official data from the Bank of Mexico (Banxico). This represents a gain of 6.86 centavos, or 0.36% for the peso in a single session.

During the trading day, the dollar fluctuated between a high of 19.0300 and a low of 18.8982 pesos. Meanwhile, the U.S. Dollar Index (DXY)—which measures the greenback against a basket of six major currencies—fell 0.24% to 97.74 points.

Over the course of three sessions, from last Friday’s close at 19.1683, the peso has strengthened by 24.39 centavos, or 1.29%. This rebound follows a brief surge to 19.35 pesos per dollar at the height of Middle East tensions.

USD/MXN

Powell’s Testimony Weighs on Markets

The day’s trading was also influenced by semiannual testimony from Federal Reserve Chair Jerome Powell, who told the U.S. Congress that the Fed must carefully manage the risk of sustained inflationary pressures stemming from new tariffs.

Markets are still digesting Powell’s cautious tone, particularly his indication that the Fed is in no rush to cut interest rates, and his warning about the inflationary impact of trade measures backed by President Trump.

All Eyes on Banxico

Locally, attention now turns to the Bank of Mexico, which is scheduled to announce its monetary policy decision on Thursday. Market consensus points to a 50 basis-point rate cut, which would be Banxico’s third consecutive reduction of that size, bringing the benchmark interest rate down to 8.00%.

However, some analysts note that a smaller cut could actually boost the peso, by signaling a narrower spread relative to U.S. interest rates and slowing the pace of monetary easing.

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ABOUT THE AUTHOR See More

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.