The Mexican peso closed steady after relinquishing earlier gains that had pushed it past the 17.00-units-per-dollar mark for the first time since 2024, while the stock market fell to its lowest level since mid-March.
In wholesale trading, the exchange rate ended at 17.03 pesos per dollar—according to the Bank of Mexico’s session closing price—representing a gain of one centavo (0.01 percent) compared to Thursday’s close. Over the week, the peso posted a total gain of 10 centavos (0.63 percent).
During the session, the exchange rate hit a high of 17.05 and a low of 17.00 units per greenback; however, in international trading, it briefly traded below the 17-unit mark—the strongest level for the Mexican currency in two years.
The peso’s appreciation occurred amidst a weakening dollar, which was impacted by July retail sales data that came in below expectations.
That figure, combined with consumer and producer inflation reports from the world’s largest economy this week, led traders to push back their bets on interest rate hikes by the U.S. Federal Reserve (Fed), resulting in global dollar weakness, Reuters noted.
The peso “is touching its lowest level since June 3, 2024, when market conditions were under pressure due to elections in our country,” Kapital Grupo Financiero stated in an analysis note. It added that “today, conditions are different; there is an absence of domestic pressures, and the situation is unfolding in an environment of very low volatility and volume, alongside a significant preference for the carry trade.” The “carry” strategy involves borrowing money in a currency with a low interest rate and investing it in another currency or asset with a high interest rate, in order to profit from the interest rate differential.
Meanwhile, Banco Base noted in a report that “the exchange rate momentarily broke below the key support level of 17.00 pesos per dollar. This increases the likelihood that (…) it will head toward the next relevant technical level of 16.91 pesos per dollar—a level not seen since June 3, 2024.” However, the bank added that “the peso is already in overbought territory, so an upward correction cannot be ruled out.”
In the stock market, the Mexican Stock Exchange’s main indicator, the S&P BMV/IPC, fell 0.66 percent to 64,397.45 points; it declined in four out of the five sessions during the week, accumulating a total loss of 3.79 percent.
The local exchange closed in line with major Wall Street indices, which also ended lower. The Dow Jones fell 0.20 percent, the Nasdaq dropped 0.28 percent, and the broader S&P 500 index fell 0.17 percent after hitting an all-time high the previous day.
These declines occurred during a session in which data revealed that U.S. household spending had dropped to its lowest level in over a year; a decline in consumer confidence was also reported, while the resumption of hostilities in the Middle East weighed on investor sentiment.
This data, combined with slowing inflation, reinforced expectations that the Fed will maintain current interest rates at its upcoming September meeting.
