- The Mexican peso pressed despite Besent’s commercial optimism while the markets react to the EE.UU tariff escalation against China.
- The Citi survey shows that Banxico is expected to cut rates in 50 bp in May; Growth forecasts reviewed down.
- The operators expect the data of the IPC of Mexico and the US inflation with the Fed Proceedings that will probably shape fees expectations.
The Mexican peso prolonged its losses for the third consecutive day against the dollar, since the feeling of the market improved, driven by the revelations of the US Treasury Secretary, Scott Besent, that agreements could be made with the main business partners. At the time of writing, the USD/MXN is quoted at 20.75, with an increase of 0.65%.
Until the time of writing, the global mass sale of shares has pauses, however, the bulls are not out of danger, despite the fact that Besent’s words provide hope. However, it was known that the White House confirmed that 104% tariffs on China entered into force at 12:00 pm
The peso weakened slightly before the headlines in the middle of a little economic agenda. USD/MXN operators are waiting for the publication of the Consumer Price Index (IPC) of March, which is expected to increase slightly.
The CITI Mexico expectations survey suggests that most economists project greater relief by the Bank of Mexico (Banxico), which is expected to cut rates in 50 basic points (PB) in May. It is likely that the USD/MXN exchange rate remains below 21.00, and the economy is expected to grow less than expected in the previous survey.
On the other side of the border, the governor of the Chicago Fed, Austen Goolsbee, crossed the lines, saying that tariff rates are much higher than the Fed had been modeling. In the data front, the calendar is absent, but investors are attentive to the publication of the last minutes of the Fed, together with the US CPI and PPI data.
Daily summary of market movements: Mexican weight falls while economists project a deeper economic slowdown
- The Citi Mexico expectations survey revealed that Banxico cuts at 8% at the end of 2025. For next year, the rates are expected to fall to 7%.
- The survey showed that it is projected that the USD/MXN ends in 20.90, while inflation in 2025 will be 3.80% for the whole year and will increase from 3.66% to 3.7% by the end of the year.
- The Gross Domestic Product (GDP) of Mexico is expected to grow 0.3% in 2025, less than the previous 0.6% survey.
- The governor of Banxico, Victoria Rodríguez Ceja, declared that the Central Bank will remain attentive to US commercial policies and its impact on the country, with a main approach to inflation.
Technical perspective of the USD/MXN: The Mexican weight remains stable while the USD/MXN exceeds 20.70
The upward trend remains as the USD/MXN exceeded the confluence of simple mobile socks (SMA) of 50 and 100 days about 20.34/36, keeping recovery alive. With a greater strength, buyers could challenge the peak of March 4 in 20.99, followed by the maximum of the year to date (YTD) of 21.28.
On the contrary, if the USD/MXN falls below 20.34, the first support will be the psychological figure of 20.00. A rupture of this last will expose the 200 -day SMA in 19.80.
BANXICO FAQS
The Bank of Mexico, also known as Banxico, is the central bank of the country. Its mission is to preserve the value of the Mexican currency, the Mexican weight (MXN), and set the monetary policy. For this, its main objective is to maintain low and stable inflation within the target levels – in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%.
The main Banxico tool to guide monetary policy is the fixation of interest rates. When inflation is above the goal, the bank will try to control it by raising the rates, which makes the debt of homes and companies more expensive and, therefore, cools the economy. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN. The rate differential with the dollar, or the way in which Banxico is expected to set interest rates compared to the United States Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year and its monetary policy is very influenced by the decisions of the United States Federal Reserve (Fed). Therefore, the decision -making committee of the Central Bank usually meets a week after the Fed. In this way, Banxico reacts and sometimes anticipates the monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised the rates, Banxico first did it in an attempt to reduce the possibilities of a substantial depreciation of the Mexican weight (MXN) and avoid capital outputs that could destabilize the country.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
