FX.co ★ Mexican Peso at Over 6-Month High

In late April, the Mexican peso appreciated to over 19.6 against the U.S. dollar, reaching its highest point in more than six months. This upward trend was propelled by the overall weakening of the U.S. dollar and the anticipation of a consistently hawkish approach from the Bank of Mexico. Data from mid-April revealed that core inflation had climbed to an annual rate of 3.9%—the steepest since September 2024—lending support to the decision to maintain Banxico’s benchmark interest rate at a stringent 11%. The substantial real interest rate differential in Mexico continues to draw significant carry-trade investments, further bolstered by a reassuring and "very productive" conversation between President Trump and President Sheinbaum, which alleviated worries about potential U.S. tariffs on steel, automobiles, and tomatoes. In addition, steady oil export revenues continue to bolster Mexico's external financial health. Simultaneously, the depreciation of the dollar reflects increasing skepticism regarding a quick resolution to U.S.-China trade disputes, leading investors to reconsider the attractiveness of U.S. financial assets.