Peso Climbs to Strongest Level Since July,Supported by carry Trade and Fed Expectations
Mexico City – The Mexican peso reached its highest valuation since July 2024 this thursday,December 5,trading in a narrow band between 18.22 and 18.29 units per dollar, bolstered by a favorable “carry trade” and expectations surrounding potential interest rate cuts by the U.S. Federal Reserve. The peso’s recognition occurred alongside a 0.18 percent gain in the Mexican Stock Exchange (BMV), with its main indicator, the Price and Quotation Index (IPC), closing at 63,714.86 units.
The peso’s strength reflects ongoing structural support driven by its attractive carry – the difference in interest rates between Mexico and other countries – and anticipation of a Fed cut in December, alongside domestic financial stability. While global volatility and geopolitical factors persist, these fundamentals continue to underpin the currency. The slight easing of expectations for a December 10 Fed rate cut, from 99 percent earlier in the week to 91.4 percent, did have a minor dampening effect on the capital market.
“Despite global volatility and geopolitical noise, the structural support of the peso remains in force thanks to a carry attractive; the expectation of a Fed cut in December, yeah domestic financial stability,” explained Felipe Mendoza, CEO of IMB Capital Quants.
Wall Street presented a mixed close ahead of the anticipated Fed meeting, with the Dow Jones falling 0.07 percent to 47,850 units, while the S&P 500 rose 0.11 percent to 6,857 points, and the Nasdaq increased 0.22 percent to 23,505 points.
Gabriela Siller, director of economic and financial analysis at Banco Base, noted to EFE that the slight reduction in the probability of a Fed cut influenced capital market performance.