Mexican Peso Strengthens Toward 1-Year Highs

2025-09-29 13:53 By Felipe Alarcon 1 min. read

The peso strengthened past 18.38 per US dollar, approaching its strongest level since July 2024 of 18.29 seen September 16th after an expected Banxico rate cut removed a domestic shock while a softer US dollar reopened carry flows.

Banxico delivered a 25 bp cut to 7.50% in a split vote and described the move as calibrated and conditional, which reassured investors that easing will be gradual and not destabilising.

The decision was widely priced in before the meeting so there was no surprise-driven outflow and markets instead refocused on cross-border yield differentials.

Mexico’s unemployment rose to 2.9% in August from 2.8% in July which implies modest slack but did little to instill a major policy shift.

At the same time US inflation prints were broadly stable and US long yields eased, which weakened the dollar and removed an important external headwind for emerging market currencies.



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