Mexican Peso Hits 26-month High

The Mexican Peso touched 17.08 against the USD, the highest since June 2024. Over the past 4 weeks, US Dollar Mexican Peso lost 2.54%, and in the last 12 months, it decreased 8.08%.

The Mexican peso strengthened to 17.21 per USD from the near four-month low of 17.60 reached on July 24th after Banxico kept its benchmark interest rate unchanged at 6.50% and signaled that it expects to maintain the current policy stance. The central bank held rates steady for a second consecutive meeting as policymakers balanced falling headline inflation and weaker economic activity against persistent services inflation and risks from the Middle East conflict. Banxico reiterated that future decisions will depend on incoming data and highlighted uncertainty surrounding geopolitical tensions and global trade policies. The peso continued to benefit from a wide interest rate differential, with Mexico's policy rate at 6.50% compared with the Federal Reserve's 3.50%-3.75% target range.

The Mexican peso held steady at 17.44 per USD in late July after the Federal Reserve left interest rates unchanged, a decision that weakened the US dollar as roughly one-third of investors had expected a rate hike. Mexico continued to benefit from a wide interest rate differential, with Banxico's policy rate at 6.50% versus the Fed's 3.50%-3.75% range, although further Fed tightening could narrow the peso's yield advantage. Investors also viewed Mexico's trade position favorably after the US announced new tariffs on imports from about 60 economies. Goods that comply with USMCA rules of origin will remain exempt from the new measures, preserving Mexico's preferential access to the US market. Meanwhile, Mexico's trade surplus widened to $4.09 billion in June from $0.51 billion a year earlier, well above forecasts of $2.28 billion.