The Mexican peso depreciated by 1.16 percent against the US dollar on Wednesday 23 September, falling 20 centavos against the previous close to trade at 17.49 per dollar as markets prepared for domestic monetary policy decisions.
Central bank policy outlook
The currency retreat comes ahead of the Bank of Mexico’s upcoming monetary policy announcement scheduled for Thursday 24 September. The Mexican central bank faces market expectations that it will hold its benchmark borrowing costs steady.
Gabriela Siller, director of economic analysis at Banco Base, noted the catalyst for the shift: “The peso is depreciating ahead of the Bank of Mexico’s monetary policy decision tomorrow, Thursday 24 September, for which it is expected to keep the interest rate unchanged at 6.50 percent.” The policy rate stands at 6.50 percent.
Federal Reserve interest rate path
Traders also focused on monetary prospects north of the border, where the Federal Reserve interest rate could rise by 25 basis points three times towards June 2027 under current market expectations, which would narrow the rate gap between Mexico and the US. Shifts in yield differentials weigh on currency pairs.
The projected path of US borrowing costs remains a central factor for emerging market foreign exchange flows across Latin America. Rate decisions continue driving currency movements.
Related: Mexican peso firms to 17.22 per dollar ahead of Banxico · Mexican business chief urges Banxico rate cut amid peso surge
Source: Banco Base
