Mexican peso hits near one-year low against US dollar

The Mexican peso experienced a significant decline, closing at approximately 18.41 pesos per US dollar, marking its weakest level in nearly a year. This depreciation follows five consecutive weeks of losses for the currency, which fell 1.2% during the latest session.

The primary driver for the decline was the release of minutes from the Banco de México (Banxico) monetary policy meeting. The document revealed that three out of five Governing Board members are open to considering further cuts to the benchmark interest rate, provided inflationary conditions allow.

Investors are concerned that accelerated interest rate cuts in Mexico, compared to the more cautious stance of the US Federal Reserve, will narrow the interest rate differential between the two nations. This narrowing reduces the attractiveness of the peso for carry trade operations. Despite the currency's weakness, the Mexican Stock Exchange saw a gain of 1.63% during the same period.