The Mexican peso recorded a sharp decline in October.

The Mexican peso appreciated on the last trading day of October but still closed the month with a sharp cumulative decline, as markets brace for the U.S. presidential elections.

The peso regained ground on the final day of October due to a weakening U.S. dollar, though it remained under pressure near the psychological level of 20 pesos. The exchange rate closed at 20.0109 pesos per dollar, recovering 15.86 cents (or 0.79%) from the previous official close of 20.1695, according to data from Banco de México (Banxico).

During the session, the dollar traded in a range between a high of 20.1890 and a low of 19.9851 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the dollar against six major currencies, fell by 0.09% to 103.90 points.

Compared to September’s official close of 19.6921 pesos per dollar, the peso depreciated by 31.88 cents or 1.62%. Some analysts attributed part of this decline to market concerns about upcoming constitutional changes in Mexico.

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The peso appreciated after hitting a two-year low the previous day, with traders weighing U.S. labor market and inflation data that did not alter expectations for Federal Reserve rate cuts. If the 19.97 resistance holds on Friday, a weaker peso may be expected next week; however, if the peso strengthens, a drop in the exchange rate to 19.80 could be possible.

Earlier in the day, U.S. data showed a decline in weekly initial jobless claims and a slightly higher-than-expected rise in consumer spending in September, seasonally adjusted.

The peso’s sharp decline in October was largely due to market caution ahead of the U.S. presidential election, with the potential for a Trump victory, as well as rising U.S. Treasury yields. Political developments in the U.S. and recent legal adjustments in Mexico have added to the nervousness surrounding short-term peso buying.