The Mexican peso was little changed at 17.44 per USD in late July after the Federal Reserve left interest rates on hold, a decision that weighed on the US dollar, especially as roughly one-third of investors had expected a hike. Mexico continued to benefit from a wide interest rate differential, with Banxico’s policy rate at 6.50% compared with the Fed’s 3.50%-3.75% range, though any further tightening by the Fed could erode the peso’s yield advantage. Sentiment toward Mexico’s external position also improved after the US announced new tariffs on imports from around 60 economies. Goods that meet USMCA rules of origin will remain exempt, preserving Mexico’s preferential access to the US market. At the same time, Mexico’s trade surplus widened sharply to $4.09 billion in June from $0.51 billion a year earlier, far exceeding market expectations of $2.28 billion.