FX.co ★ Mexican Peso Rebounds on Risk Appetite

The Mexican peso strengthened to around 17.7 per US dollar as a broad improvement in global risk sentiment and a sharp pullback in the greenback offered relief to emerging-market assets. The rebound was driven largely by a marked narrowing of the dollar’s safe-haven premium after President Trump postponed, for five days, planned military strikes on Iranian energy infrastructure following productive negotiations. Domestically, the peso received additional support from a robust 5% year-on-year increase in Mexican retail sales in January, far exceeding market expectations and underscoring the resilience of the local economy despite elevated borrowing costs. The currency had previously touched a three-month low of 18.08 on concerns over a potential closure of the Strait of Hormuz, but the subsequent easing in geopolitical tensions triggered a sharp decline in Brent crude prices, tempering the inflation outlook. Together, these developments bolstered the Bank of Mexico’s hawkish policy stance.