Mexican Peso Halts Downturn

2026-03-09 13:53 By Felipe Alarcon 1 min. read

The Mexican peso traded around 17.8 per dollar on Tuesday, halting its retreat at a seven-week low as resurgent domestic inflation fueled expectations for a hawkish pause by the Bank of Mexico.

Annual inflation climbed to 4.02% in February, surpassing market forecasts of 3.94% and breaching the central bank’s 4% upper threshold for the first time in nearly a year.

This acceleration was driven by significant spikes in processed foods and a 9.88% surge in fruit and vegetable prices, while core inflation remained stubborn at 4.5%.

These data points have effectively diminished the likelihood of a March interest rate cut, providing a temporary floor for the currency despite the 10% global import taxes introduced in early 2026 and the ongoing Middle East conflict.

While higher oil prices benefit Mexico's fiscal accounts, the peso remains vulnerable to a broader flight toward safe havens like the greenback as geopolitical instability and cooling US demand continue to cloud the export outlook.



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