FX.co ★ Mexican Peso Tests June-2024 Highs

The Mexican peso strengthened toward 17.20 per US dollar, approaching its firmest level since mid‑2024, as markets digested January inflation data and Banco de México’s recent rate pause amid a softer US dollar. Banxico’s decision to keep the policy rate at 7% on February 5 and to emphasize persistent inflation risks—rather than hint at rapid cuts—tempered expectations for aggressive near-term easing and helped preserve the peso’s real yield advantage, easing concerns about earlier carry erosion.

Headline inflation edged up to 3.79% in January, slightly below forecasts, with contained monthly price pressures. This reduced perceived downside risks for Mexican assets while still allowing the central bank to maintain a cautious stance. Externally, the US Dollar Index retreated from recent highs as softer US labor data bolstered expectations for Federal Reserve easing.