2025.09.0415:38:45UTC+00Mexican Peso Weakens to 2-Week Lows

In early September, the Mexican peso weakened to approximately 18.75 per USD, reaching its lowest level in two weeks. This decline was attributed to a stronger US dollar, diminished local financial flows, and a more restrained approach by Banxico regarding monetary policy adjustments. An important contributor to the dollar influx, remittances, decreased by 4.7% in July compared to the previous year. This marked the fourth consecutive month of declines, removing a previously supportive factor for the peso earlier in 2025. Additionally, unemployment in Mexico rose slightly to 2.8% in July from 2.7% in June, a minor shift that dampens consumer spending and suggests a need for continued economic easing. The central bank has initiated a prudent cycle of easing, reducing its rate by 25 basis points to 7.75% and indicating a careful, data-driven approach moving forward, which decreases the attractiveness of interest rate carry trades. Concurrently, the US dollar has remained near its late August peak, exerting additional pressure on the Mexican currency.