The Mexican peso weakened on Thursday morning after hitting its best level against the U.S. dollar in almost eight years on Wednesday.

One U.S. dollar was worth 17.30 pesos at 12 p.m. Mexico City time, according to Bloomberg.

The USD-MXN exchange rate dipped to a low of 16.98 on Wednesday, but the greenback subsequently strengthened slightly to close at 17.01 pesos.

Data published Thursday that showed that private payrolls in the United States increased 497,000 in June was cited as a factor that strengthened the dollar and thus weakened the peso this morning. The positive jobs data, published by ADP Research Institute, was the best result since February 2022.

“The peso depreciates today due to the strength of the dollar,” Gabriela Siller, director of economic analysis at Banco Base, wrote on Twitter.

“The employment data from ADP was very good and creates speculation about more interest rate increases in the United States,” she said.

CI Banco analysts said that the peso was facing pressure from the “hawkish tone” of the Fed’s minutes from its June monetary policy meeting, which were released Wednesday, as well as the ADP job data.

The United States Federal Reserve will make its next interest rate decision on July 26. The federal funds rate in the U.S. is currently set at a range of 5% to 5.25%.

Analysts cite the Bank of Mexico’s high benchmark interest rate – currently 11.25% – and the significant difference between that rate and that of the Fed as one factor in the current strength of the peso.

Mexico’s currency has appreciated significantly this year after starting 2023 at about 19.5 to the U.S. dollar.

With reports from Radio Fórmula, El Financiero and Bloomberg