2025.10.2814:09:05UTC+00Mexican Peso Holds Strong After Unemployment

The Mexican peso recently traded at approximately 18.40 per US dollar, nearing its highest point in a year. This stability comes amidst carry trading flows and various macroeconomic risks, which have kept the currency within a specific range. The labor market has shown signs of weakening, evidenced by a rise in unemployment to 3% in September—the highest level observed in a year. This situation has led to a cooling in household income and consumption, negatively impacting short-term growth prospects.

In addition, Mexico’s external balances are facing challenges. The country recorded a goods trade deficit of roughly $2.4 billion in September, increasing demand for dollars to settle import payments and other external financial obligations. Meanwhile, domestic monetary policy has shifted, with the central bank lowering the policy rate in late September. This move reduced the policy rate premium, which had previously supported carry trade inflows, prompting investors to become more discerning.

Despite this, markets have not anticipated any drastic changes in liquidity, instead pricing for a gradual easing path. Furthermore, improved prospects of a US government funding agreement and signs of progress in US-China trade relations have mitigated the immediate external risk premium, thereby helping to stabilize market volatility.