Puerto Vallarta, Mexico - The Mexican peso is facing renewed pressure against the U.S. dollar, pushing the exchange rate toward levels of 20.6109 pesos per dollar. At the opening of today's financial markets, the peso showed a depreciation of 0.58 percent, influenced by a robust dollar reaching a one-year high.
Market participants are keenly awaiting the Bank of Mexico's (BdeM) monetary policy decision scheduled for later today. Analysts widely expect the BdeM to reduce the benchmark interest rate by 0.25 percentage points, bringing it down from the current 10.50 percent. This anticipated move aims to align with global monetary easing trends and stimulate domestic economic activity.
In addition to monetary policy developments, economic agents are closely monitoring the upcoming presentation of the Economic Package for 2025. Investors are looking for signals on how the government plans to address the fiscal deficit, which economists estimate could reach 6 percent of GDP by the end of the year.
On the international front, the U.S. dollar continued its ascent on Thursday. The DXY index, which measures the greenback against a basket of six major currencies, gained 0.32 percent to reach 106.725 units—its highest level since early November 2023. This rise comes after U.S. inflation data showed a 2.6 percent annual increase in October, casting doubts on the extent of the Federal Reserve's potential interest rate cuts.
While the inflation figures have bolstered expectations for a 0.25 percentage point cut by the Federal Reserve in December, uncertainty lingers over the long-term trajectory of interest rates. Contributing to this uncertainty is the recent victory of Donald Trump in the U.S. presidential election. Analysts suggest that the new administration's policies could influence the Federal Reserve's decisions and add volatility to global markets.
The Chinese yuan has also experienced a decline against the dollar. Concerns are mounting that senior officials appointed by President Trump may introduce measures leading to increased volatility in currency markets. The dollar's strength has pushed the euro closer to parity, with the common currency threatening to drop below 1.05 dollars. The British pound has similarly weakened, declining to 1.27 dollars.
U.S. debt markets are reacting to these developments, with the yield on 10-year Treasury bonds rising to 4.464 percent. Interestingly, this inflationary pressure on interest rates is not driven by oil prices. Oil markets remain subdued due to the strengthening dollar and potential U.S. trade actions against China, which could dampen demand from the world's largest crude importer. Brent crude is trading around $73.09 per barrel, up 1.12 percent, while West Texas Intermediate stands at $69.25 per barrel, up 1.24 percent.
Meanwhile, U.S. stock market futures are exhibiting mixed signals, with the Nasdaq index trending lower. Investors appear cautious amid the interplay of domestic policy changes, international trade concerns, and shifting monetary policies.
Outlook
As the day progresses, all eyes will be on the Bank of Mexico's rate decision and the government's fiscal plans for the coming year. The interplay between domestic monetary policy and international economic forces will continue to shape the peso's trajectory and the broader financial landscape in Mexico.
