Puerto Vallarta, Mexico – The Mexican peso continued its downward trend on Wednesday as it fell to 19.41 per dollar, marking a 0.41% decline from Tuesday’s benchmark rate set by Reuters. The peso’s depreciation comes amid lower-than-expected inflation data for September, with markets bracing for insights from the latest Federal Reserve meeting minutes, set to be released later in the day.
Inflation Rate Lower than Forecasted
The latest report from Mexico’s National Institute of Statistics and Geography (INEGI) revealed that the country’s consumer price index (CPI) rose by only 0.05% in September, a figure well below market expectations. Core inflation, which removes volatile items such as food and energy prices to provide a clearer gauge of inflationary trends, increased by 0.28% for the month, bringing the annualized rate down to 4.58%.
Financial consultancy VectorAnálisis commented on the inflation figures, stating, “As for Mexico, September inflation was 0.05% monthly, below market expectations… At an annual rate, inflation slowed to 4.58%. Core inflation also surprised on the downside and slowed its annual measurement. Good data.”
The continued decline in inflation may open the door for the Bank of Mexico to consider further easing of interest rates. This potential move would follow the bank’s recent 25-basis-point cut in September, which brought the country’s benchmark interest rate down to 10.50%.
Stock Market Shows Positive Momentum
Despite the peso’s slump, the Mexican Stock Exchange (BMV) opened on a positive note on Wednesday. The main S&P/BMV IPC index, representing the most actively traded shares on the Mexican market, climbed 0.22% to reach 51,877.92 points in early trading.
Shares of key players in Mexico’s construction and industrial sectors showed gains. Infrastructure firm Pinfra saw a 1.94% increase, bringing its share price to 177.06 pesos, while conglomerate Grupo Carso rose 1.40% to 122.79 pesos. These gains are seen as a positive indicator for investor confidence in domestic firms amid moderate inflation trends and market stability.
Alfa’s Shares Decline as Spin-Off Announcement Looms
In contrast to the day’s upward market trend, shares of Alfa, one of Mexico’s largest business conglomerates, fell 3.66% to 14.74 pesos. The drop followed an announcement from the company that it would propose the spin-off of its petrochemical unit, Alpek, at an upcoming extraordinary shareholders’ meeting scheduled for October 24. The move, aimed at allowing each unit to operate independently and potentially increasing their market valuation, has been in discussion for some time but remains a significant shift for Alfa’s organizational structure.
The market response to the announcement reflects both anticipation and uncertainty among investors regarding the financial impact of the spin-off on Alfa’s stock value in the short term.
Market Anticipation for Federal Reserve Meeting Minutes
The Mexican market’s eyes are now on the U.S. Federal Reserve as it releases the minutes from its latest policy meeting. With global economies facing a mix of inflationary pressures and monetary tightening, the Fed’s stance will likely influence market movements in both emerging and developed economies. The peso, sensitive to such announcements, could see further shifts based on the Fed’s projected path for interest rates and economic outlook.
The current economic indicators suggest that, while Mexico’s inflation rate continues to trend downward, the peso remains vulnerable to external pressures, notably those from the United States. The Bank of Mexico’s next moves, in light of the latest inflation data, will be watched closely by markets to gauge whether it will consider further interest rate cuts aimed at bolstering domestic growth amid a stabilized inflation landscape.
Puerto Vallarta, Mexico - The Mexican peso continued its downward trend on Wednesday as it fell to 19.41 per dollar, marking a 0.41% decline from Tuesday’s benchmark rate set by Reuters. The peso’s depreciation comes amid lower-than-expected inflation data for September, with markets bracing for insights from the latest Federal Reserve meeting minutes, set to be released later in the day.
