The Mexican peso opened the session with marginal gains against the US dollar, trading at 18.8034 pesos per dollar. That is an appreciation of 0.16 percent, or 3.46 centavos, against its last official close, according to Bloomberg data.
Carry trade unwinding drives the move
Gabriela Siller, director of economic analysis at Banco Base, said upward pressure on the exchange rate is due to carry trade positions continuing to unwind. She pointed to expectations of further US interest rate increases. The possibility that other central banks also adopt a more restrictive stance is adding to the pressure, she said.
The market expects another Federal Reserve rate increase this year. Traders are reducing positions that borrow in low-yielding currencies to buy higher-yielding ones.
Dollar index edges lower
The US dollar index, which measures the greenback against a basket of six major currencies, fell 0.05 percent to 101.99 points. The Bloomberg dollar index declined 0.15 percent over the same period.
Gains remained modest in the early session.
Related: Mexican peso falls 1.15% to 18.63 per dollar · Mexican peso firms to 18.42 per dollar on Monday
