Mexican Peso Weakens on Friday but Ends the Week with Gains

The Mexican peso depreciated on Friday, pressured by a stronger U.S. dollar following a key U.S. jobs report and influenced by local inflation data, which continued to slow.

The exchange rate closed at 20.5450 pesos per dollar, compared to 20.4612 pesos in the previous session, according to official data from Banco de México (Banxico). This represented a decline of 8.38 centavos (0.41%) for the peso.

USD/MXN

Dollar Strength and U.S. Employment Data

The USD/MXN traded within a range of 20.4295 to 20.5859 pesos, while the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.36% to 108.09 points.

The dollar gained strength after the nonfarm payroll report showed that U.S. job growth slowed in January, yet the unemployment rate fell to 4%. This data reinforced expectations that the Federal Reserve will keep interest rates stable for longer.

Inflation and Monetary Policy Outlook

In Mexico, the consumer price index (CPI) eased to 3.59% in January, below market expectations and marking its lowest level in four years. This further supports the case for Banxico to continue cutting its benchmark interest rate.

Weekly Performance and Outlook

Despite Friday’s depreciation, the peso strengthened 0.69% (14.21 centavos) on the week, closing stronger than last Friday’s 20.6871 pesos per dollar. The week was characterized by cautious trading amid ongoing trade tensions.

The exchange rate remains near 20.50 pesos per dollar, suggesting a period of consolidation. However, additional upward pressure on the peso cannot be ruled out, especially after Banxico’s 50-basis-point rate cut and the Federal Reserve’s decision to keep borrowing costs unchanged. Traders continue to assess the monetary policy landscape and a complex global trade environment.

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.