The Mexican peso weakened to as low as 17.08 to the US dollar on Tuesday morning, a depreciation of around 4.6% compared to the 16.30 level it reached just over a week ago.
Bloomberg data shows that the peso was trading at 17.08 to the greenback just before 9 a.m. Mexico City time before appreciating to reach 17.00 at midday.
The low point represented a depreciation of 2.1% compared to the peso’s closing position on Monday of 16.72 to the dollar.
Janneth Quiroz, director of analysis at the Monex financial group, said on the X social media platform that the peso was affected by “an increase in aversion to international risk.”
Investors are “nervous” as they await a response from Israel to the recent attack by Iran, she wrote.
The DXY index, which measures the value of the US dollar against a basket of foreign currencies, was up slightly at midday.
On Tuesday morning, investors were also waiting for further clues about the United States Federal Reserve’s monetary policy intentions ahead of a speech by the central bank’s Chair Jerome Powell.
Speaking at a policy forum, Powell noted that the U.S. economy was strong, but inflation hadn’t receded to the Fed’s 2% goal.
Until inflation shows progress in moving toward that target, “we can maintain the current level of restriction for as long as needed,” he said.
His remarks pointed to “the further unlikelihood that interest rate cuts [in the U.S.] are in the offing anytime soon,” CNBC reported.
The peso has benefited for an extended period from the broad gap between the Bank of Mexico’s key interest rate — currently 11% after a 25-basis-point cut last month — and that of the Fed, set at a range of 5.25%-5.5%.
The peso has also benefited from strong inflows of remittances and foreign investment. The currency began the year at just over 17 to the dollar before appreciating to reach its strongest position in almost nine years on April 8.
Gabriela Siller, director of economic analysis at Mexican bank Banco Base, noted on X on Friday morning that the USD:MXN exchange rate was once again above 17, adding that “with this, the peso erases its gain this year.”
With reports from El Financiero and Aristegui Noticias
I think the rise and fall of the peso and the dollar is cyclical in nature and hardly news and feel gasoline prices and inflation are true market basket stories.
This seems to have been more specific to the peso, so this general international risk aversion doesn’t seem to be a useful explanation. The IMF just adjusted likely US economic growth upward and Mexican growth downward. Not only with this expectations on future interest rate changes, but also provides a real signal to the market that uncertainty in Mexico has increased with elections coming up and pension reform idea being floated.
You are 100% right.
Mexico has to grow its infrastructure first, and it is being held captive by selective private monopolies.
All energy is owned by the government, there are price controls on everything. The only monopoly in Mexico is the government. Now in the US, that is clearly the case.
The US is in stagflation right now, and no one wants to admit it. As it’s largest supplier, Mexico is also beginning to feel the effects. Mexico cannot advance to the next level without dealing with security issues and water supplies.
The US economy is growing at about 3%, inflation slightly above. However, America is at full employment and is easily absorbing its newest immigrant legal and irregular. These immigrants are not working for the federal minimum wage of $7,25 per hour, but for $20 to $25 per hour. The wages being made in America are real increases after inflation is factored in. The losers in this economy are that small percentage of 20-35 year year olds who do not have secured mortgages at the previous 2.5 to 4% rate. At 7% mortgages, private housing is too expensive for them until the fed lowers interest rates.
En los últimos años he comenzado a rastrear la fortaleza del peso, creo que es una posición muy interesante. He hablado mucho de México recientemente y no me di cuenta de la fortaleza en el mundo, es muy triste ver esta caÃda este mes, pero las fluctuaciones de altibajos en el mercado. He estado siguiendo esto muy de cerca recientemente y tengo interés en cómo interactúan el PESO/Dólar con el Reino Unido y la Libra Esterlina.
Atentamente
Cristóbal Shackleton
Estoy seguro de que esto solo será una fluctuación temporal