Mexican Peso Gains During the Session but Ends the Week Lower

The Mexican peso recovered ground against the U.S. dollar on Friday, appreciating as the greenback pulled back.

This rebound overshadowed negative factors like a local interest rate cut and a downgrade to Mexico’s credit outlook by Moody’s.

The exchange rate closed the session at 20.3811 pesos per dollar, up from 20.4261 pesos yesterday, according to official data from the Bank of Mexico (Banxico). This represented a gain of 4.50 centavos, or 0.22%.

Throughout the day, the dollar traded between a high of 20.5104 pesos and a low of 20.3190 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, rose 0.09% to 106.77 points.

On Thursday, Banxico announced a 25 basis point interest rate cut, lowering the benchmark rate to 10.25% and signaling the possibility of further cuts. Additionally, Moody’s downgraded Mexico’s credit outlook to negative due to “institutional deterioration.”

Despite Friday’s gains, the peso ended the week on a negative note. Compared to last Friday’s official close of 20.1948 pesos per dollar, the currency weakened by 18.63 centavos, or 0.92%, for the week.

The market could support further gains for the Mexican peso in the coming sessions as the year-end approaches. This follows the currency’s sharp decline to its lowest level in two years after Donald Trump’s victory in the U.S. presidential election.

Analysts suggest that a correction in the exchange rate could bring the peso to support levels around 20.22 and 20.15. Additionally, there is a potential resistance level at 20.63, which proved difficult to surpass in 2022.