Peso Climbsโฃ to Strongest Level Since July,Supported by carry Trade and Fed Expectations
Mexico City – โขThe Mexican peso reached its highest valuation since July 2024 this thursday,December 5,trading in a narrow band between 18.22 โคand 18.29 โunits per dollar, bolstered by a โfavorable “carry trade” and expectations surrounding potential โคinterest rate cuts โby the U.S.โค Federal Reserve. โขThe peso’s recognition occurred alongside a 0.18 percent gain in the โฃMexican Stock Exchange (BMV), โฃwith โits main indicator, the Price and Quotation Index (IPC), closing at 63,714.86 units.
The โpeso’s strength reflects โคongoing structural support driven by its attractive carry – the difference in โinterest rates between Mexico โฃand other countries – and anticipation of a Fed cut in December, alongside domestic financial stability. While global volatility and geopolitical factors persist, theseโ fundamentals continue to underpin the currency. The slight easing of expectations for a Decemberโ 10 Fed rate cut, from 99 percent earlier in the week to 91.4 percent, did have a โminor โdampening effect on โฃthe capital โคmarket.
“Despite global volatility โคand geopolitical noise, theโฃ structural support of the peso remains in force thanks โคto a carry attractive; โฃthe expectation โof a Fed cut in December, โขyeah domestic financial stability,” explained Felipeโ Mendoza, CEO of IMB Capital Quants.
Wall Street presented a mixed close ahead of theโ anticipated Fed meeting, โwith the Dow Jones โคfalling 0.07โ percent to 47,850 units, โคwhile the S&P 500 rose 0.11 percent to โฃ6,857 โฃpoints, and the โNasdaq increased 0.22 percent โฃto 23,505 points.
Gabriela Siller, director of economic and financialโฃ analysis at Banco Base, noted to EFE that the slight reduction โin the probability of a Fed cut influenced capital market performance.
