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Mexican peso weakens after Banxico holds rates at 6.50%
USD/MXN jumped more than 1% to 17.75, its highest level since late April, after Banxico said it will not react mechanically to expected Fed moves.
The Mexican peso extended its losses versus the US dollar after the Bank of Mexico, Banxico, kept its benchmark interest rate unchanged at 6.50% and said it would not set policy mechanically based on the expected path of Fed funds, according to FXStreet.
Following the decision, the USD/MXN pair rose more than 1% to 17.75, its highest level since late April. Banxico noted that its policy decisions will consider the ongoing disinflation process and the expected behavior of its determinants, which include the USD/MXN exchange rate.
Banxico also said it expects inflation to converge toward its 3% goal by the fourth quarter of 2027, based on its inflation projections for headline and core measures.
FXStreet added that Mexico’s core inflation rose from 0.08% to 0.17% month over month in the first half of September, below forecasts of 0.2%, while headline inflation increased from 0.1% to 0.33%, above forecasts of 0.26%.