Puerto Vallarta, Mexico – The Mexican peso made significant gains against the US dollar on Friday, closing at 20.3811 pesos per dollar. This appreciation occurred despite recent economic challenges, including a cut in local interest rates and a downgrade of Mexico’s credit outlook by Moody’s Investors Service.
The peso’s improvement saw it rise by 4.50 cents, or 0.22 percent, compared to yesterday’s closing rate of 20.4261 pesos per dollar, according to official data from the Bank of Mexico (Banxico). Throughout the day, the dollar fluctuated between a high of 20.5104 and a low of 20.3190 pesos, while the Intercontinental Exchange Dollar Index (DXY), which measures the US currency against six major international currencies, edged up by 0.09 percent to 106.77 points.
Banxico’s recent decision to reduce interest rates by 25 basis points to 10.25 percent has been a critical factor influencing the peso’s performance. The central bank signaled the possibility of further rate cuts, aiming to stimulate economic growth. However, these moves came amidst Moody’s downgrade of Mexico’s credit rating to negative, citing “institutional deterioration” as a key concern.
Despite the peso’s gains on Friday, it concluded the week with an overall decline. The currency fell by 18.63 cents, or 0.92 percent, ending the week at 20.3811 pesos per dollar compared to 20.1948 pesos last Friday. This weekly drop underscores the volatility in the currency market amid mixed economic indicators.
Market analysts remain optimistic about the peso’s prospects in the coming days. Golden Capital Fx analysts highlighted that the market could support further improvement for the peso as the year draws to a close. They noted that the peso reached its lowest level in two years following Donald Trump’s victory in the US presidential elections, but current trends suggest a potential rebound. “The correction in the exchange rate could take it to levels of 20.22 and 20.15, where it could find support. Additionally, the analysis indicates a possible resistance at 20.63, a level that was difficult to overcome in 2022,” explained the analysts.
The peso’s recovery was also bolstered by the presentation of the Mexican government’s budget proposal for 2025. The proposed budget aims to reduce the fiscal deficit, instilling confidence among investors and contributing to the peso’s strength. Official projections indicate that the peso could further recover, potentially reaching 19.7 pesos per dollar by the end of the year.
As Mexico navigates these economic developments, the peso’s performance remains a focal point for investors and policymakers alike. The interplay between Banxico’s monetary policies, Moody’s credit rating adjustments, and government fiscal strategies will continue to shape the currency’s trajectory in the near term.
Puerto Vallarta, Mexico - The Mexican peso made significant gains against the US dollar on Friday, closing at 20.3811 pesos per dollar. This appreciation occurred despite recent economic challenges, including a cut in local interest rates and a downgrade of Mexico's credit outlook by Moody's Investors Service.
