Mexican Peso Steady in Late April

The Mexican peso was at 17.5, holding near a three-week low as weak GDP data backed the Bank of Mexico's recent dovish position. The Mexican GDP contracted by 0.8% on the first quarter of 2026, a sharper contraction than expectations of a 0.5% decrease. The data indicated broad pressures on the economy as both manufacturing and services contracted sharply, while extractive industries slumped despite the increase in oil and silver prices. The result increased bets that Banxico is due to extend its cutting rate this year. The central bank unexpectedly delivered a rate cut in March despite evidence of sharp inflationary pressures, trimming the foreign exchange inflows from carry positions that have supported the Mexican peso this year.

The Mexican peso weakened to 17.5 per USD in the end of April, the lowest in three weeks, as geopolitical tensions strengthened demand for hard currencies. US President Trump signaled the blockade of tankers from Iran will remain in the near term, dimming expectations of an agreement to end the conflict and driving emerging markets to pivot toward harder currencies. The greenback was also supported by hawkish dissents in the Fed's rate hold. Also, Mexico's annual domestic inflation rate eased to 4.53% in the first half of April 2026, down from 4.63% in March, despite higher energy prices globally due to the Iran conflict. Core inflation also declined to 4.27%, the lowest in five months, falling from 4.46%. The easing inflation has raised expectations for a more dovish stance by the Bank of Mexico, contributing to the peso's depreciation against the US dollar.

The Mexican peso traded near 17.4 per USD, easing from the six-month high of 17.25 touched on April 15th, after data reflected a cooler inflation rate. The annual domestic inflation rate eased to 4.53% in the first half of April 2026, down from 4.63% in March, despite higher energy prices across the globe due to the conflict in Iran. Core inflation also declined to 4.27%, the lowest in five months, falling from 4.46%. The easing inflation has raised expectations for a more dovish stance by the Bank of Mexico, contributing to the peso's depreciation against the US dollar. The central bank had already surprised markets in its last rate decision by delivering a 25bps cut to 6.75%, the lowest in nearly four years. Still, the peso remained 3.6% higher since the start of the year with support from carry-trade demand from US investors.