The Mexican peso was back below 18 to the US dollar for a brief period on Tuesday morning, almost four weeks after dipping to a six-month low against the greenback.

The USD:MXN exchange rate dropped to as low as 17.93 before the greenback regained ground, according to Bloomberg data. That rate is an improvement of 44 centavos, or about 2.5%, for the peso compared to the six-month low of 18.37 to the dollar it reached on Oct. 5.

However, at 12 p.m. Mexico City time, the peso had weakened to 18.03 to the dollar.

The peso strengthened on three consecutive trading days between last Thursday and Monday after closing at almost 18.33 to the dollar last Wednesday. The currency closed at 18.15 to the dollar last Thursday, 18.11 on Friday and 18.05 on Monday.

The newspaper El Economista reported that the peso appreciated due to reduced aversion to risk as nervousness about the conflict in the Middle East wanes.

The peso’s strengthening early Tuesday came after the publication of data that showed stronger-than-expected economic growth in Mexico in the third quarter of the year.

But later in the day, the peso was trading at or near its closing position on Monday.

Gabriela Siller, director of economic analysis at Banco Base, said on the X social media site that the USD:MXN exchange rate “is not managing to consolidate below 18 pesos per dollar due to risks at the global level and in Mexico.”

When the greenback is below 18 pesos, “advance purchases of dollars and foreign exchange hedges are being made, which makes the exchange rate go up [above 18] again,” she added.

Janneth Quiroz, director of economic analysis at the financial group Monex, noted on X just before 9 a.m. that the gains made by the peso earlier in the day had been erased.

She said that the peso on Tuesday was “affected by an increase in aversion to risk” after the publication of weak manufacturing data out of China.

Another factor that will likely affect the USD:MXN exchange rate this week is the United States Federal Reserve’s monetary policy decision. The Fed will announce its decision Wednesday afternoon.

Its officials “are widely expected to leave interest rates steady … but investors and economists will watch for any hint about whether rates are likely to stay that way,” The New York Times reported.

At 11.25%, the Bank of Mexico’s benchmark interest rate is well above that the Fed’s 5.25-5.5% target range. Analysts cite the broad gap between the two rates as one factor that has helped the peso appreciate this year after it started the year at about 19.5 to the greenback.

With reports from El Economista