Mexican Peso Slips After Fed Minutes, Trades Near 18 per Dollar
Policymakers revealed divisions over whether inflation could stall, reinforcing expectations of a pause in the tightening cycle.
Quick overview
- U.S. Treasury yields rose and the dollar strengthened following the Federal Reserve's meeting minutes, which indicated support for maintaining the benchmark interest rate.
- The Mexican peso weakened against the dollar, closing at 17.9959 pesos per dollar, a slight decline from the previous session.
- Despite the recent pullback, the peso remains one of the best-performing currencies this year, showing a gain of 13.82% compared to the end of last year.
- Analysts expect short-term exchange-rate stability as markets approach year-end, with little chance for significant shifts in the current positive balance.
U.S. Treasury yields rose and the dollar strengthened after the release of the Federal Reserve’s meeting minutes, which signaled support for keeping the benchmark interest rate unchanged.
The Mexican peso weakened against the dollar on Tuesday, giving back some of the gains that had taken it to its strongest level since July 2024 last Friday. The pullback came as markets head into year-end and digested the latest minutes from the Federal Reserve.
The exchange rate closed the session at 17.9959 pesos per dollar. Compared with Monday’s close of 17.9682, according to official data from the Banco de México (Banxico), the move represented a decline of 2.77 centavos, or 0.15%.
During the session, the dollar traded within a range, with a high of 18.0020 pesos and a low of 17.9203. The U.S. Dollar Index (DXY), published by the Intercontinental Exchange, rose 0.22% to 98.23 points, reflecting broad-based dollar strength.
Still Below the 18-Peso Threshold
The peso has remained below the psychologically important level of 18 per dollar since mid-December, consolidating in a range not seen in roughly 17 months. This move coincided with a third consecutive 25-basis-point rate cut by the Federal Reserve.
Investors were closely watching the minutes from the Fed’s final meeting of the year for clues on the future path of U.S. interest rates. Policymakers revealed divisions over whether inflation could stall, reinforcing expectations of a pause in the tightening cycle.
Rising Treasury yields supported the dollar, while the peso was pressured by expectations that the interest-rate differential between Mexico and the U.S. could narrow. According to FedWatch data, futures markets assign an 85% probability that the Fed will keep rates unchanged at its January meeting.
Strong Annual Performance
Despite the recent pullback, the peso remains one of the best-performing currencies this year. Compared with a close of 20.8829 pesos per dollar at the end of last year, the current level implies a gain of 2.88 pesos, or 13.82%, in 2025.
With liquidity thinning toward year-end, analysts see little chance of a significant shift in this positive balance. A year-end close in the 17.95–18.00 range points to short-term exchange-rate stability, helping to limit volatility for hedging and trade flows as markets await new catalysts.
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