FX.co ★ Mexican Peso Rebounds

The Mexican peso appreciated to surpass 18.38 against the US dollar, nearing its highest point since July 2024, when it reached 18.29 on September 16th. This occurred despite Banxico's rate cut, as the decision had been largely anticipated by investors who remained focused on the US dollar's weakness. The 25 basis point reduction to 7.50% was already factored into the market, preventing any drastic sell-off. Mexico continues to offer comparatively higher real yields than many other countries, maintaining carry trade demand and prompting some investors to keep favoring peso assets. Banxico characterized the rate cut as calibrated and conditional, rather than part of an aggressive easing strategy, which assured markets that inflation risks are still being closely monitored. Concurrently, the US dollar weakened in response to stable US inflation figures, which lessened external pressure on emerging market currencies.