USDMXN Fundamental Analysis – The Mexican peso is currently hovering around 17.3 against the US dollar. This situation is shaped by two major factors: the Federal Reserve’s less aggressive stance and the Bank of Mexico’s tight policy. The US dollar saw a pullback as the Federal Reserve chose not to alter interest rates in its three latest meetings, indicating a less assertive plan for 2024. On the other side, the Bank of Mexico, in its last meeting of December 2023, decided to keep its key policy rate at a high of 11.25%.
This move aligns with the inflation rate in November, which reached 4.32%. This increase was mainly due to certain specific items, while the standard inflation rate stayed high at 5.30%. The forecast for 2023 suggests a drop in overall inflation but a rise in the standard rate. The economic indicators are promising, with the Purchasing Managers’ Index showing ongoing growth and Industrial Production performing better than expected. These signs point to a positive future for Mexico’s economy. Source bloomberg.