Mexican peso depreciation continued on Thursday amid a mix of soft inflation and cautious policy decisions. Traders showed limited enthusiasm despite earlier gains. The currency slipped in a session defined by a split-rate cut. The midday session saw narrow swings amid low volume. Traders waited for more clarity on Banxico’s future policy direction. Investors parsed local and global cues before placing their bets.
The peso closed at 18.6368 per dollar, a decline of 0.12 percent. It lost 2.26 cents versus Wednesday’s record 18.6142 level. The move followed a midweek high near 18.58. Market turnover remained subdued during late Asian and European hours. Money-market futures signaled expectations for slower easing ahead.
Trading ranged between 18.5904 at its trough and 18.7357 at its peak. The Intercontinental Exchange’s Dollar Index fell 0.13 percent to 98.10. A weaker DXY aided minor peso losses. Currency traders eyed inflation and rate news.
Banxico Rate Cut and Split Vote
Banxico cut its benchmark rate by 25 basis points to 7.75 percent. The decision came with a 4–3 split among board members. It marked the lowest policy rate since August 2022. Officials said they will review data before future cuts.
Banxico signaled caution, citing mixed inflation trends. It aims to guide overall inflation back into its two-to-four percent target band. Despite this stance, Mexican peso depreciation reflects ongoing currency pressure. Officials noted that global rates and local prices shape policy. They left room for adjustments as needed.
INEGI reported headline inflation eased to 3.51 percent in July. That reading marked the lowest since December 2020. Core inflation remained at 4.23 percent, above target. Analysts said sticky service prices may keep pressure on rates. They expect data later this month to guide the next move.
Technical Outlook and Market Risks
Banorte analysts noted a technical rebound after the peso broke resistance at 18.58. They see support near 18.74 and advise holding positions. Their view underscores cautious sentiment. Traders remain alert to sudden shifts. Market participants noted rising US yields as a risk factor.
Global factors may intensify pressure on the peso. US economic reports and Fed policy will guide dollar strength. A stronger dollar could push the peso lower. Investors now await the next US jobs report. They will also watch oil price moves. Oil price swings may also influence the peso.
The peso’s gentle slide underscores market caution. Soft local inflation and a mild rate cut shaped Thursday’s move. Traders will eye the Banxico statement and US data. For now, the currency trades in a narrow range. Its path hinges on global trends and domestic inflation. Policy divergence between the Fed and Banxico will remain in focus. Volatility may rise with key data ahead.
