The Mexican peso lost ground against the US dollar today, once again breaching the psychological barrier of 20.00 units per dollar. The depreciation comes amid a strengthening US dollar and renewed market uncertainty following the recent U.S. presidential election.
As of 7:30 AM Mexico City time, the exchange rate rose to 20.02 pesos per dollar, marking a 1.14% decline for the local currency, according to real-time data from Investing.com. This movement reverses the gains recorded in the previous session, when the peso closed at 19.79 per dollar.
“Today, the peso is part of the 74% of emerging currencies that are depreciating against the dollar, affected by recent comments from President-elect Donald Trump on immigration policies and ongoing caution regarding possible tariff measures that may be implemented next year,” said Janneth Quiroz Zamora, Director of Economic, Foreign Exchange, and Stock Market Analysis at Grupo Financiero Monex.
The decline of the Mexican peso is occurring alongside an advance in the US dollar, which is trading with gains against other international currencies following the Federal Reserve’s recent decision. The dollar index, which measures the currency against a basket of six major currencies, increased by 0.18% to 104.70 units.
Market Reacts to U.S. Election Results
The peso had previously shown signs of recovery after significant losses earlier this week, following the announcement that Republican candidate Donald Trump won the U.S. presidential election on November 5, defeating Democratic rival Kamala Harris. The news led the local currency to reach a new yearly high of 20.80 pesos per dollar during the trading session on November 6.
Yesterday’s temporary advance for the peso was bolstered by the announcement that Mexico’s inflation rate in October rose to 4.76% annually, higher than the expected 4.72% and above September’s 4.58%. This data strengthens expectations that the Bank of Mexico will proceed with more caution in its interest rate adjustments.
Additionally, the peso benefited from the dollar’s weakness observed yesterday, which persisted after the Federal Reserve announced a 25 basis point cut in interest rates.
“The dollar’s weakness was due to increased risk appetite amid expectations of tax cuts in the United States following Trump’s victory and anticipation that China’s National People’s Congress Standing Committee would announce new fiscal stimuli on Friday, November 8,” explained Gabriela Siller Pagaza, Director of Economic and Financial Analysis at Grupo Financiero Base.
China’s Economic Stimulus Measures
China’s stimulus package includes a $1.4 trillion debt initiative aimed at easing local government funding strains and stabilizing the country’s economic growth.
“However, the announcement was not well received by the markets, as it is not aimed at stimulating consumption and economic growth in the short term,” noted Siller Pagaza.
Looking Ahead
Investors are now awaiting the Bank of Mexico’s next monetary policy decision scheduled for next week, where a 25 basis point rate cut is anticipated.
Despite today’s depreciation, if the session ends at current levels, the Mexican peso would record a weekly gain of 1.38% against the US dollar, breaking a streak of three consecutive weeks of losses.
