Mexican Peso Rallies to 1.58% Weekly Gain vs. Dollar
The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, fell 0.09% to 98.19 points.
Quick overview
- The Mexican peso reached an 18-month high, reflecting a strong start to the year as concerns over Donald Trump's Greenland stance eased.
- The exchange rate ended at 17.3677 pesos per dollar, gaining 0.64% from the previous close.
- The peso's rally was supported by a speech from Trump that alleviated market fears and ongoing dollar weakness.
- Despite a reported contraction in Mexico's economic activity, the peso improved significantly compared to last week's close.
The Mexican peso hit a new 18-month high, extending its strong start to the year as traders grew less nervous about U.S. President Donald Trump and his stance on Greenland.
The peso extended its gains against the dollar on the final trading day of the week. The local currency reached a fresh 18-month high, continuing its strong early-year performance as market participants became less concerned about Donald Trump’s intentions regarding Greenland.
The exchange rate ended the session at 17.3677 pesos per dollar. Compared with Thursday’s close of 17.4802, according to official data from the Bank of Mexico (Banxico), the move represented a gain of 11.25 centavos, or 0.64%, for the peso.
The dollar traded within a range, with a session high of 17.4973 pesos and a low of 17.3657. The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, fell 0.09% to 98.19 points.
USD/MXN Exchange Rate Drivers
After a speech by Trump at the World Economic Forum in Davos eased market concerns over his push to assert control over Greenland, the peso extended its year-to-date rally. Having consolidated below the 17.50 level, the currency also benefited from continued weakness in the dollar.
The easing of tensions between the United States and Europe over Greenland helped drive a weekly improvement in the exchange rate. Compared with last week’s close of 17.6465 pesos per dollar, the currency posted a gain of 27.88 centavos, or 1.58%.
Friday’s advance came despite a session marked by an unexpected contraction in economic activity in November. Mexico’s statistics agency INEGI reported that the Global Indicator of Economic Activity (IGAE) fell 0.2% month over month and declined 0.1% year over year.
After three days of consolidating between 17.50 and 17.40, the peso broke below that range. A sustained move below the 17.40 support level could open the door to a test of the psychological 17-per-dollar mark.
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