Mexico’s Peso Hides Behind a Sunshine‑Slick Wave
At the start of the week, people on the trading floor were sipping coffee and smiling when the Mexican peso nudged up against the U.S. dollar. The back‑up was simple: the greenback was showing a wide‑open shrug, leaving the peso to shine a little brighter.
But the Good Mood Won’t Last Long…
Recent numbers from the Mexican government are telling a different story. The country’s Global Indicator of Economic Activity (IGAE) dipped 0.2 % month‑on‑month in January and stayed flat for the year. On the bright side, primary‑sector activity (think mining, construction and manufacturing) isn’t too shabby— it jumped 3.1 % that month and 14.6 % year‑on‑year. But the secondary part of the economy, which includes wholesale and retail trade, fell 0.4 % month‑on‑month and saw an annual decline of 2.8 %.
Those structural hurdles in mining, construction and factory work have become quite the roadblocks for growth. While services (the tertiary sector) held steady on the month and edged up a modest 0.5 % annually, the overall picture looks less optimistic.
Inflation’s New Look
Let’s talk about price tags:
- Mid‑month data shows a 0.24 % rise in underlying inflation— food and services are putting a pinch on consumers.
- The non‑underlying (or “core”) part slipped 0.19 %.
- Year‑over‑year, inflation ticked down to a 3.67 % rate, a decent drop from last year’s 4.48 %.
So inflation’s showing signs of cooling while economic activity is calming down. That means the central bank, Banxico, might keep its friendly “rate‑cutting” policy rolling. Helpful for moderate growth, but it could mean the peso stays in a modest state rather than sprinting forward.
What’s Next for the Peso?
With the dollar still playing soft, the peso will likely enjoy a few more feel‑good moments. But the cooling economy and the slight inflation slowdown signal that the highs may be short‑lived. As the world watches, Mexico’s currency might ride a wave of gentle buoyancy— not a tidal wave, but steady enough to keep traders’s fingers hovering a bit.
