Mexican peso hits two-year high against US dollar

The Mexican peso has reached its strongest levels against the US dollar since mid-2024, breaking below the 17.00 threshold. This appreciation is largely driven by external factors, including a weakening US dollar following disappointing retail sales and inflation data, which has reduced expectations for Federal Reserve interest rate hikes. Additionally, the wide interest rate differential between Mexico and the US has encouraged 'carry trade' strategies, where investors borrow in low-interest currencies to invest in the higher-yielding peso.

While the currency's strength benefits importers and those with dollar-denominated debt, analysts note it may pressure exporters and those receiving remittances. In Argentina, currency markets show continued volatility, with the official dollar trading around $1,515 and the informal 'blue dollar' at approximately $1,540, reflecting ongoing local economic pressures and exchange restrictions.