Mexican Peso Weakens Toward One-Year Low
The Mexican peso weakened to around 18.4 per US dollar in October, nearing a one-year low and tracking gains by the US currency against other emerging-market currencies. The dollar strengthened amid expectations of further Fed tightening, as elevated inflationary pressures stemming from the Middle East situation coincided with resilient US economic performance. The narrowing interest-rate differential is also undermining the appeal of the Mexican currency. Narrower yield spreads between Mexico and developed economies, combined with expectations that Banxico will keep monetary policy stable, are reducing the incentive for peso carry-trade strategies.
4 per US dollar in October, nearing a one-year low and tracking gains by the US currency against other emerging-market currencies. The dollar strengthened amid expectations of further Fed tightening, as elevated inflationary pressures stemming from the Middle East situation coincided with resilient US economic performance. The narrowing interest-rate differential is also undermining the appeal of the Mexican currency. Narrower yield spreads between Mexico and developed economies, combined with expectations that Banxico will keep monetary policy stable, are reducing the incentive for peso carry-trade strategies.