The Mexican peso continued its downward trend for the third consecutive day on Thursday, driven by a pronounced aversion to risk as investors processed robust economic data from the United States.
The exchange rate concluded the day at 18.4524 pesos per dollar, marking a decline from its previous closing value of 18.3705 pesos, as reported by the Bank of Mexico (Banxico). This change represents a fall of 8.19 cents for the peso, equivalent to a 0.45 percent decrease.
Throughout the trading session, the dollar fluctuated within a range, peaking at 18.5887 pesos and reaching a low of 18.3190 pesos. The Intercontinental Exchange Dollar Index (DXY), which evaluates the dollar’s strength against a basket of six major currencies, remained steady at 104.39 points.
Local investors’ concerns were heightened by the ongoing debate over the controversial judicial reform proposed by the ruling Morena party. Additionally, the upcoming US election has injected further uncertainty into the market.
“Yesterday’s inflation report and the current legislative environment prompted some cautious investors to close their positions in the national currency, thereby strengthening the dollar,” explained José Feliciano González, a professor at the Escuela Bancaria y Comercial (EBC).
In the United States, it was revealed that the gross domestic product (GDP) grew at an annualized rate of 2.8% in the second quarter, significantly exceeding the 2% forecasted by analysts. This unexpected growth bolstered expectations for a potential interest rate cut by the Federal Reserve.
Despite this, pressure on local assets prevented the Mexican peso from benefiting from the anticipated wider interest rate differential. Over the past three trading sessions, starting from Monday’s rate of 17.9408 pesos per dollar, the currency has depreciated by 51.16 cents, or 2.85 percent.
“Risk aversion remains prevalent,” stated Grupo Financiero Banorte in an analytical note. Analysts at Intercam Casa de Bolsa highlighted that the exchange rate faced an initial short-term resistance at 18.43 pesos and found support at 18.32 pesos.
As investors navigate the complex interplay of domestic reforms and international economic indicators, the Mexican peso’s trajectory will likely remain influenced by both local and global factors. The market will be closely monitoring further developments in the US economic landscape and the progression of Mexico’s judicial reform to gauge future movements in the exchange rate.
The Mexican peso continued its downward trend for the third consecutive day on Thursday, driven by a pronounced aversion to risk as investors processed robust economic data from the United States.
The exchange rate concluded the day at 18.4524 pesos per dollar, marking a decline from its previous closing value of 18.3705 pesos, as reported by the Bank of Mexico (Banxico). This change represents a fall of 8.19 cents for the peso, equivalent to a 0.45 percent decrease.
