FX.co ★ Mexican Peso Hovers Around 18 USD

The Mexican peso maintained its position around 18 per US dollar, as a stronger dollar continued to counterbalance its domestic support. This came in light of Banxico's latest minutes, which reaffirmed a cautious, albeit not aggressively dovish, policy outlook. Following the anticipated 25 basis point reduction to 7.00% in December, the minutes highlighted a reliance on data, acknowledging that while disinflation is making progress, underlying pressures, especially in core components, still necessitate caution. Policymakers indicated no urgency to hasten rate cuts, portraying future reductions as contingent rather than predetermined, which helped to stabilize expectations after the initial narrowing of the rate differential. In December, headline inflation eased to 3.69% and core inflation slowed to 4.33%, aligning broadly with forecasts and supporting the perspective that inflation risks are diminishing, albeit not vanquishing fully. In this context, robust US economic data continued to bolster the dollar and limited the peso's appreciation, resulting in the Mexican currency trading sideways.