Mexican Peso Strengthens Against the Dollar for Sixth Consecutive Day

The Mexican peso gained ground against the U.S. dollar on Tuesday morning, marking its sixth consecutive day of appreciation. This upward trend follows better-than-expected data on U.S. manufacturing activity, which boosted market sentiment.

The peso traded at 20.2272 per dollar in the spot market, improving from Monday’s official closing rate of 20.3006 pesos, according to Banco de México (Banxico). This represents a gain of 7.34 cents or 0.36%.

The dollar fluctuated within a range of 20.3361 at its highest and 20.2210 at its lowest during the session. Meanwhile, the Dollar Index (DXY), which measures the greenback against six major currencies, rose by 0.28%, reaching 107.03 points.

The Empire State Manufacturing Index, a key indicator from the Federal Reserve Bank of New York, climbed to 5.7 in February, far exceeding analysts’ expectations of -1.0, as per a Reuters poll.

Market participants also monitored statements from former U.S. President Donald Trump on trade policies and ongoing negotiations related to the war in Ukraine and talks with Russia in Saudi Arabia.

Mexico’s Economic Outlook

Banco Base noted that Trump’s tariff plans could heighten risk aversion, potentially exerting upward pressure on the exchange rate. The bank forecasted a trading range between 20.21 and 20.42 pesos per dollar for the session.

Domestically, Mexico’s National Institute of Statistics and Geography (Inegi) reported a preliminary 1.8% year-over-year increase in economic activity for January 2024. On a monthly basis, activity edged up by 0.1% compared to December 2023.

However, analysts cautioned that signs of slowing growth persist, with final data for December’s Global Indicator of Economic Activity (IGAE) and fourth-quarter GDP figures due on February 21 expected to provide more clarity.

Financial experts also pointed to upcoming remarks by Federal Reserve officials Mary Daly and Michael Barr. They noted that these remarks could influence market dynamics throughout the day.

As global and local factors unfold, investors remain cautious about the peso’s performance. However, they stay optimistic amid shifting economic signals and geopolitical developments.

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