Mexican Peso Gains Ground Following Banxico’s 25 Basis Point Rate Cut
The local currency gained modestly in a session that also saw the release of U.S. producer inflation figures.
The Mexican peso appreciated against the U.S. dollar on Thursday, supported by the release of U.S. inflation data and a recent interest rate cut by the Bank of Mexico (Banxico).
The exchange rate closed the session at 20.4261 pesos per dollar, compared to yesterday’s close of 20.5149 units, according to official Banxico data. This movement marked a gain of 8.88 cents or 0.43% for the peso. Throughout the day, the dollar fluctuated between a high of 20.6795 units and a low of 20.3817 pesos. Meanwhile, the U.S. Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against six major currencies, rose 0.35% to 106.86.
Banxico confirmed on Thursday its decision to cut rates by 25 basis points to 10.25%. The Governing Board highlighted that the balance of risks remains tilted to the downside and noted that the inflation outlook continues to improve, potentially allowing for further rate cuts.
With this fourth rate cut in 2024, Banxico has reduced rates by a total of 100 basis points since the start of its easing cycle. T
In the United States, Federal Reserve Chair Jerome Powell stated on Thursday that robust economic growth, a strong labor market, and inflation above target mean the U.S. central bank should not rush to lower rates.
Powell reiterated that U.S. central bankers believe inflation is “on a sustainable path toward the 2% target,” allowing the Fed to gradually shift towards a more neutral rate environment.
Earlier today, the market reacted to the release of U.S. producer price data. The index rose 0.2% month-over-month in October, matching expectations, while the annual increase reached 2.4%, its highest level in four months.
The latest inflation data suggests the Fed’s battle against inflation may persist longer than anticipated. Additionally, it was reported that the number of weekly jobless claims fell more than expected to 217,000.
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