Puerto Vallarta, Mexico – Mexico’s peso weakened against the U.S. dollar on Friday, driven by the dollar’s strengthening after the release of a key U.S. labor report and domestic inflation data indicating a slowdown.
The peso closed the trading session at 20.5450 units per dollar, compared to Thursday’s rate of 20.4612 units, according to official data from the Bank of Mexico (Banxico). This decline of 8.38 cents represents a depreciation of 0.41 percent for the Mexican currency.
During the trading session, the dollar fluctuated between a high of 20.5859 units and a low of 20.4295 units. The Dollar Index (DXY), which measures the greenback’s performance against a basket of six major currencies, rose by 0.36% to 108.09 points.
U.S. Labor Market and Dollar Strength
The dollar gained traction following the release of nonfarm payrolls data showing that U.S. job growth slowed in January. However, the unemployment rate fell to 4%, surprising analysts. The labor market figures bolstered expectations that the Federal Reserve may maintain stable interest rates for a longer period, further supporting the dollar’s value.
Mexico’s Inflation Declines
On the domestic front, Mexico’s consumer price index (CPI) showed a year-over-year increase of 3.59% in January, marking its lowest level in four years. The reading exceeded market expectations and reinforced the view that Banxico might continue cutting its key interest rate.
The lower inflation rate is a positive signal for Mexico’s economy, providing more room for monetary policy adjustments to support economic growth. However, the peso’s decline suggests market caution amid broader global factors.
Weekly Comparison and Market Sentiment
Despite Friday’s depreciation, the peso appreciated on a week-to-week basis. Compared to last Friday’s close of 20.6871 units, the currency gained 14.21 cents, equivalent to a 0.69% appreciation.
Banco Base analysts noted that the exchange rate has found equilibrium around the 20.50 units per dollar level. “However, additional upward pressures on the exchange rate cannot be ruled out,” they cautioned.
Monetary Outlook
Market participants remain attentive to monetary policy developments after Banxico implemented a 50-basis-point interest rate cut last week. Simultaneously, the Federal Reserve maintained its borrowing costs, contributing to a complex trading environment for the peso.
As traders navigate global economic uncertainties and local market dynamics, the peso’s trajectory will likely continue to be influenced by external pressures, including U.S. labor market developments and the Federal Reserve’s policy stance.
Puerto Vallarta, Mexico - Mexico's peso weakened against the U.S. dollar on Friday, driven by the dollar's strengthening after the release of a key U.S. labor report and domestic inflation data indicating a slowdown.
The peso closed the trading session at 20.5450 units per dollar, compared to Thursday’s rate of 20.4612 units, according to official data from the Bank of Mexico (Banxico). This decline of 8.38 cents represents a depreciation of 0.41 percent for the Mexican currency.
