Wednesday, June 19, 2024

Peso rises on Day of the Dead

It’s Day of the Dead, but there’s life in the Mexican peso yet.

The peso has strengthened every day this week and reached 17.54 to the US dollar at midday on Thursday.

Bank of Mexico facade
The Bank of Mexico has maintained high interest rates this year which has contributed to the peso’s strength against the US dollar. (MOISÉS PABLO/CUARTOSCURO.COM)

The USD:MXN exchange rate at 9:30 a.m. Mexico City time was 17.62, according to Bloomberg. That’s a difference of exactly 1 peso compared to the best position it has reached this year – 16.62 on July 28.

Compared to its position at the close of markets last Friday, the peso has strengthened 49 centavos or 2.8% against the greenback.

The currency closed just above 18 to the dollar on Tuesday, but appreciated to 17.76 by the end of trading on Wednesday after the United States Federal Reserve held its funds rate steady at a range of 5.25%-5.5%.

Analysts cite the broad gap between the Bank of Mexico’s benchmark interest rate – currently 11.25% – and that of the Fed as one factor that has helped the peso appreciate this year after it started the year at about 19.5 to the greenback.

The Bank of Mexico, which has maintained its key rate at 11.25% since raising it to that level in late March, will hold its next monetary policy meeting on Nov. 9.

Its board has repeatedly said that it will be necessary to maintain the benchmark rate at its current level for “an extended period” in order to achieve “an orderly and sustained convergence of headline inflation to the 3% target.”

Annual headline inflation was 4.27% in the first half of October. The figure for the entire month of October hasn’t yet been published.

Mexico News Daily 

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