Mexican Peso Weakens Against the Dollar for Second Straight Session
The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rose 0.17% to 97.91.
Quick overview
- The Mexican peso weakened against the dollar for the second consecutive session, closing at 17.2768 pesos per dollar.
- Minutes from Mexico's central bank indicated temporary inflationary pressures due to new taxes and tariffs on Chinese imports.
- The U.S. Federal Reserve's recent minutes suggested a hawkish stance, with potential rate hikes if inflation stalls.
- Investors are also considering geopolitical tensions, particularly concerns over a possible military conflict between the U.S. and Iran.
The peso fell for a second consecutive session as markets digested the monetary policy outlook in both Mexico and the United States, following the release of minutes from their respective central banks.
The Mexican peso weakened against the dollar in Thursday’s trading, extending its decline for a second day in a market adjusting to shifting monetary policy expectations on both sides of the border.
The exchange rate closed at 17.2768 pesos per dollar, compared with 17.2319 the previous session, according to official data from the central bank, representing a depreciation of 4.49 centavos, or 0.26%.
During the session, the dollar traded in a range between a high of 17.3013 and a low of 17.1929 pesos. The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rose 0.17% to 97.91.
Banxico minutes
Minutes from the latest monetary policy meeting showed that Mexico’s central bank—after pausing its long rate-cutting cycle last month—identified temporary inflationary pressures stemming from new taxes and tariffs on Chinese imports.
While policymakers noted that the impact of these measures on prices has so far been “limited and localized,” the minutes also highlighted uncertainty regarding the speed and magnitude of the pass-through of higher tariffs to consumer prices.
A hawkish Fed
At the same time, the exchange rate continues to absorb the message from the U.S. Federal Reserve’s Federal Open Market Committee minutes, which showed a near-unanimous decision to pause rate cuts and explicitly mentioned the risk of rate hikes should inflation stall.
The combination of a more hawkish Fed and Mexico’s domestic reform agenda creates a challenging environment for the peso, despite the structural support provided by the country’s export sector.
Data and geopolitics
Investors also digested fresh U.S. economic data, including weekly jobless claims. New filings totaled 206,000 last week, below expectations of 223,000 and the prior week’s 229,000.
On the geopolitical front, some analysts linked the dollar’s strength to rising concerns over the possibility of a military conflict between the United States and Iran.
Looking ahead, the peso is expected to hold support in the 17.20–17.27 range. If the Fed maintains a restrictive tone and uncertainty surrounding the review of the USMCA deepens, the dollar could test levels around 17.35–17.42.
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