Mexican Peso Weakens Against Dollar Following Inflation Data
Mexico’s National Consumer Price Index (CPI) accelerated to 3.76% year-on-year in September, slightly below the 3.79% forecasted.
Quick overview
- The Mexican peso depreciated against the U.S. dollar, closing at 18.3855 pesos per dollar after inflation figures fell below expectations.
- Mexico's National Consumer Price Index (CPI) rose to 3.76% year-on-year in September, slightly below the market forecast of 3.79%.
- Banxico's minutes indicate a continued consideration for further interest rate cuts, with analysts predicting two additional reductions by year-end.
- Core inflation remains a focus, reflecting underlying price trends, while overall inflation in Mexico is viewed as well-contained.
The Mexican peso depreciated against the U.S. dollar on Thursday following the release of inflation figures that came in below expectations and the Bank of Mexico (Banxico) minutes, which reinforced market bets on further interest rate cuts.
The exchange rate closed the session at 18.3855 pesos per dollar, down from Wednesday’s 18.3342—a decline of 5.13 cents, or 0.128%. During the day, the dollar traded in a range between 18.3005 and 18.4141 pesos. Meanwhile, the ICE U.S. Dollar Index (DXY), which tracks the U.S. dollar against six major currencies, rose 0.56% to 99.40.
Further Rate Cuts Expected
Mexico’s National Consumer Price Index (CPI) accelerated to 3.76% year-on-year in September, slightly below the 3.79% forecasted by the market. Core inflation, which excludes the most volatile items, increased 4.28% year-on-year, in line with consensus expectations, and 0.33% month-on-month. These figures indicate that domestic inflation pressures, particularly in services, remain a challenge.
The focus remains on core inflation, which reflects the underlying price trends without temporary fluctuations. Despite the modest rebound in recent months, inflation in Mexico is considered well-contained.
Banxico Policy Outlook
In addition, Banxico released the minutes from its September monetary policy meeting. The board of governors continues to consider making additional cuts to the benchmark interest rate in the future, a policy stance that has been in place for the past 18 months.
Analysts expect two additional 25-basis-point reductions in the key interest rate by the end of the year, potentially bringing it down to 7.0%. The minutes signal that while inflation remains under control, the central bank is carefully monitoring underlying pressures and is prepared to act to support economic stability.
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