Mexican Peso's Losing Streak Continues

According to Bank of Mexico Figures, It Has Registered Three Weeks of Declines

The Mexican currency has accumulated three consecutive weeks of depreciation against the dollar, losing 6.95 percent of its value or 1.30 pesos, according to data from the Bank of Mexico.

This comes after the exchange rate in the spot market on Friday stood at 19.9984 pesos per dollar, reaching an intraday high of 20.1000 and a low of 19.9530 per unit.

In fact, the peso became the second most depreciated currency in the broad basket of major cross rates, second only to the Argentine peso, which has accumulated a decline of 18.27 percent, commented Gabriela Siller Pagaza, Director of Economic and Financial Analysis at Grupo Financiero Base.

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Although the Mexican currency has been at a disadvantage since the beginning of this year, having accumulated a depreciation of 17.33 percent from January 2 to September 6, the peso's depreciation has remained constant since mid-August.

The strengthening of the Japanese yen, with an appreciation of 0.68 percent to 146.63 units per dollar, reduced the attractiveness of carry trade operations that had previously favored the Mexican peso.

This was compounded by the release of economic indicators and relevant events, such as the revision of the second-quarter Gross Domestic Product (GDP), rising inflation, the discussion of reforms to the judiciary, and the potential disappearance of autonomous bodies.

Additionally, an external factor contributing to the peso's depreciation is concerns about the U.S. economy.

According to Siller, Mexico is also facing another risk that could negatively impact the peso: the possibility that the U.S. will impose tariffs on steel imports.

Meanwhile, Janneth Quiroz Zamora, Director of Economic, Currency, and Stock Market Analysis at Monex Grupo Financiero, identified three factors that could continue to pressure the exchange rate by the end of 2024: the approval of various reforms, the effect of carry trade positions, and the U.S. elections, which will become increasingly significant.