The Mexican peso firmed to around 18.7 per USD in November, recovering some ground after an earlier slide triggered by Banxico’s unexpected decision to cut its benchmark interest rate to 6.25%. The narrower interest-rate differential with the US Federal Reserve has reduced the attractiveness of peso-denominated carry trades, putting downward pressure on the currency.
At the same time, Banxico adjusted its forward guidance, indicating that rates are likely to remain at the new level for an “extended period.” The peso’s partial rebound came despite heightened global uncertainty, driven by a sharp selloff in technology stocks and stronger demand for safe-haven assets.
On the macroeconomic front, preliminary estimates showed that Mexico’s economy expanded 0.9% in the third quarter compared with the previous quarter, outpacing market expectations of 0.7% growth. Banxico also raised its headline inflation forecast for the fourth quarter of 2026 and slightly increased its projections for core inflation.
