Mexican Peso Falls Amid U.S. Economic Concerns and Judicial Reform Debate

Concerns over the U.S. economy combined with the progress of Mexico’s judicial reform to put pressure on Mexican markets.

The Mexican peso weakened against the dollar this Friday, closing a week of losses. Worries about the U.S. economy, coupled with the advancement of judicial reform in Mexico, added pressure on local markets.

The exchange rate closed at 19.9984 pesos per dollar. Compared to 19.9318 pesos yesterday, based on data from the Bank of Mexico (Banxico), the currency experienced a loss of 6.66 cents, equivalent to 0.33%.

The exchange rate fluctuated within a range, reaching a high of 20.0998 pesos and a low of 19.7602 pesos. The U.S. Dollar Index (DXY), which tracks the dollar against six major currencies, rose 0.07% to 101.18 points by the end of the day.

On a weekly basis, the peso declined due to both economic and political factors, slipping from 19.7027 pesos per dollar last Friday. This represents an increase in the exchange rate of 29.57 cents, or 1.51%.

The figures reinforced expectations that the Federal Reserve (Fed) might begin a more aggressive cycle of interest rate cuts this month, given the recent weakness in the U.S. labor market.

Specifically, non-farm payrolls grew by 142,000 in August, lower than analysts’ expectations of 161,000. Moreover, June and July data were revised downward, contributing to the market’s negative reaction.

Locally, the market remains focused on the ongoing process to approve the judicial reform. The Senate is expected to discuss next week modifications that include popular elections for judges, magistrates, and ministers. While the economic impact is still unclear, markets are concerned about a potential weakening of the rule of law, as the reform promotes the concentration of judicial and executive powers.