MEXICAN PESO WEAKENS DESPITE POSITIVE DOMESTIC DATA, USD STRENGTH PREVAILS

Mexican Peso dips further despite upbeat economic figures from Mexico.

Higher US yields, strong US Dollar continue to limit Peso gains, keeping it above crucial 17.00 level.

Banxico Governor Victoria Rodriguez suggests that upcoming election risks are factored into inflation projections, maintaining policy stability.

The Mexican Peso tumbles on Monday as the North American session reaches lunchtime, though it remains well below the year-to-date (YTD) low reached on April 19, when the USD/MXN rose toward 17.92. Positive economic data from Mexico failed to underpin the emerging market currency, while the US Dollar remains firm. The USD/MXN trades at 17.14, up by 0.42%.

Mexico’s National Statistics Agency (INEGI) revealed the economy fared better than expected in February, according to monthly and yearly figures, though higher US yields capped the USD/MXN downtrend. Meanwhile, Bank of Mexico (Banxico) Governor Victoria Rodriguez Ceja commented on Friday that Banxico already considers election risks in Mexico and the United States (US) and won’t alter the bank’s estimate that inflation would hit the institution target in Q2 2025.

Across the border, the US economic docket revealed the Chicago Fed National Activity Index in March improved, exceeding February’s upward revision, an indication of strength in the economy. That, along with Federal Reserve Chair Jerome Powell saying the lack of progress on inflation warrants keeping current policy restrictiveness, boosts the USD/MXN to stand above the psychological 17.00 figure.