Mexican peso drops 2.6% to 17.68 per dollar after Banxico pause

The Mexican peso weakened to its lowest level against the US dollar in five months at the close of the week. The move followed the decision by Banco de México to keep its interbank interest rate unchanged at 6.50%.

The currency closed on Friday, 25 September, at 17.68 Mexican pesos per US dollar in the spot market. This represented a weekly drop of 2.6%, or 0.45 Mexican pesos, according to data from Bloomberg.

The Mexican peso led losses among a basket of the 16 major currencies tracked by Bloomberg, followed by the Australian dollar and the British pound. Meanwhile, the US dollar index crossed the 100-point threshold, a level not recorded since July, before closing with a slight daily decline after interest rate increases by the Federal Reserve.

Financial group Monex stated in a report that the peso faces pressure as expectations persist for a more restrictive Federal Reserve and a narrower interest-rate differential. The firm projected that the exchange rate will trade between 17.63 and 17.75 Mexican pesos per dollar ahead of local trade balance data.