2025.11.0414:46:22UTC+00Mexican Peso Hits 8-Week Low

The Mexican peso has recently fallen beyond 18.6 per US dollar, reaching its lowest level in eight weeks. This decline is attributed to a combination of factors: local interest rates are anticipated to decrease, and the US dollar has strengthened as the market reduces expectations for an early cut by the Federal Reserve. Domestically, economic indicators have contributed to the pressure on the peso, with consumer confidence dipping to 46.1 in October and the S&P Global Manufacturing PMI registering at 49.5, both suggesting weaker household spending and reduced industrial demand. On the international stage, the reduction in likelihood of a Federal Reserve rate change in December has propelled the dollar to its highest levels since May, simultaneously increasing dollar funding costs for positions in emerging markets. Additionally, forecasts indicate that the Bank of Mexico (Banxico) may embark on easing monetary policy with a 25 basis point reduction, bringing rates down to 7.25% this week. Such a move is likely to diminish Mexico’s yield appeal and deter further peso inflows. Moreover, the US government shutdown and consequent data unavailability have led markets to rely heavily on limited headline releases and central bank signals, thereby amplifying the emphasis on dollar liquidity when new data suggests waning economic activity.