Skip to content USDMXN Analysis – September-18-2024
The Mexican peso recently improved to a rate of 19.0 against the U.S. dollar (USD/MXN), recovering from a significant two-year low of 20.09 recorded on September 10.
This shift comes as traders turn their attention towards global economic trends and reduce their focus on domestic issues, particularly Mexico’s controversial judicial reforms.
Impact of Judicial Reforms in Mexico
The judicial reform approved by the Mexican Senate, which mandates the popular election of all judges, has sparked considerable debate. Critics argue that this reform could dilute the judiciary’s power and increase the ruling party’s influence, threatening the balance of power.
Despite the controversy, market reactions suggest that the initial concern about these reforms might be subsiding, as their potential impact has already been integrated into current market prices.
Global Factors Influencing the Peso
Simultaneously, the U.S. dollar has shown signs of weakening, influenced by expectations of upcoming policy changes by the Federal Reserve. Investors are anticipating that the Fed will start reducing interest rates soon, which is typically decided in their Federal Open Market Committee (FOMC) meetings.
This expected shift in U.S. monetary policy is a critical factor contributing to the peso’s strengthening, as a weaker dollar generally makes other currencies stronger in comparison.
Conclusion: The Peso’s Prospects
In summary, the Mexican peso has shown resilience by rebounding from its low against the dollar, influenced by global economic trends and domestic political developments. While the judicial reforms remain a contention, the market has primarily absorbed their potential effects.
The peso’s performance will likely be closely tied to the Federal Reserve’s decisions and broader global economic conditions, making it an interesting currency for investors and analysts.
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