The Mexican ‘superpeso’ is over: Currency’s losses deepen to 18 pesos per dollar, its weakest level since last March
The strengthening of the dollar, a narrower interest-rate differential between Mexico and the U.S., and geopolitical conflicts weaken the performance of the Latin American currency
On Monday, the Mexican peso experienced a "black Monday" as its losses against the dollar reached a record low of 18 pesos per dollar. This marked the weakest point for the currency since March of the previous year. The U.S. dollar's strength, geopolitical tensions in the Middle East, and rising global interest rates were the primary factors contributing to the currency's decline.
As of the Bank of Mexico's data, the peso closed the trading session at 17.95 pesos per dollar, marking an 18% depreciation from the previous close.
The peso's performance was significantly impacted by decisions made by the central banks of both Mexico and the United States. In response to economic conditions, the Federal Reserve increased its interest rates by 25 basis points, bringing them within a range of 3.75% to 4%. This decision marked the first rate hike for the Fed since July 2023 and bolstered the dollar's value. Meanwhile, the Bank of Mexico left its interest rate unchanged at 6.5%.
This disparity in interest rates between the two countries weakened the appeal of the carry trade, a strategy involving borrowing in low-interest-rate economies and investing in higher-yielding markets.
Written by urgent.news from El Pais English's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
