Mexican Peso Strengthens Against the Dollar After Powell’s Comments
The Mexican peso appreciated against the dollar on Wednesday, navigating a session of ups and downs after Federal Reserve Chairman Jerome Powell downplayed the recent uptick in U.S. inflation.
The exchange rate closed at 20.5093 pesos per dollar, compared to 20.5392 the previous day, according to official data from Mexico’s central bank (Banxico). This represents a gain of 2.99 cents for the peso, or 0.15%.
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During the session, the dollar traded in a range between 20.4372 and 20.6311 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, edged up 0.05% to 107.98 points.
Powell’s Remarks and Inflation Outlook
The U.S. Consumer Price Index (CPI) rose 0.5% last month, following a 0.4% increase in December. On a year-over-year basis, CPI climbed 3.0%, up from 2.9% in December, exceeding analyst forecasts of 0.3% monthly and 2.9% annually.
On the second day of his semiannual testimony before Congress, Jerome Powell reiterated that the Fed is in no rush to cut interest rates, urging markets not to overreact to the inflation data, which came in notably higher than expected.
Market participants remain focused on U.S. monetary policy, particularly in a challenging trade environment that could reignite inflation due to tariff policies under former President Donald Trump’s economic agenda. A narrowing interest rate differential could pose risks for the peso.
Amid cautious sentiment, Powell’s testimony and the higher-than-expected inflation data have reinforced expectations that the Fed may keep rates elevated for longer than initially anticipated.
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