Mexican Peso slides on buoyant US Dollar, risk aversion

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  • Mexican Peso weakened as US Dollar gains despite falling US yields.
  • IMF downgrades Mexico's 2024 GDP growth outlook, citing capacity constraints and tight monetary policy.
  • US import prices fell sharply in September, while Fed’s Bostic remains optimistic about inflation hitting the 2% target.

The Mexican Peso depreciated in early trading on Wednesday as the US Dollar strengthened amid a mixed market mood with falling US Treasury yields. Softer inflation readings among developed countries suggest that further easing is coming, indicating that the global economy might slow down. The USD/MXN trades at 19.87, registering gains of 1%.

US equities are fluctuating as traders shifts focus toward small caps as the Russell 2000 outperforms the NASDAQ and S&P 500. Therefore, emerging market currencies sensitive to risk, like the Peso, remained on the back foot.

On Tuesday, the International Monetary Fund (IMF) revised Mexico’s economy downward to 1.5% in 2024 due to capacity constraints and a restrictive monetary policy. This is well below the 2.4% estimated by the Secretaria de Hacienda y Credito Publico (SHCP).

The IMF estimates GDP growth for the next year at 1.3% as inflation closes in on the Bank of Mexico’s (Banxico) 3% objective.



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