Mexican Peso Falls for Second Straight Session Ahead of Local Inflation Data

The Mexican peso depreciated for the second consecutive session on Tuesday, as the market remained cautious ahead of September’s local inflation figures and the minutes from the latest Federal Reserve meeting.

The exchange rate closed at 19.3435 pesos per U.S. dollar, compared to 19.3049 pesos the previous day, according to official data from the Bank of Mexico (Banxico). This represented a loss of 5.14 centavos for the peso, equivalent to a 0.27% decline.

The dollar fluctuated within a range between a high of 19.4511 pesos and a low of 19.2236 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, dipped 0.05% to 102.48 units.

Locally, analysts expect that annual inflation continued to decline in September, strengthening the case for the central bank to proceed with further rate cuts. Banxico is anticipated to lower the key interest rate by 25 basis points in November.

On the global front, traders are reassessing their bets on Federal Reserve rate cuts following last week’s strong U.S. employment data and comments from Fed officials. The minutes from the Fed’s meeting will provide more clarity on the outlook.

As the month progresses, news related to the U.S. electoral process, Mexico’s largest trading partner, will become more relevant. Additionally, geopolitical risks remain high, especially with the sudden rise in tensions between Iran and Israel.