Mexican Peso Breaks 18.00 Amid Rising US Yields and Narrowing Rate Gap

The Mexican Peso (MXN) continued its downward trend against the US Dollar (USD), breaking through the psychological barrier of 18.00 for the first time since April 2023, with a current price of 18.04.

This decline is attributed to the narrowing interest rate differential between Mexico and major economies, coupled with rising US Treasury yields above 5%.

A Reuters analyst views this move as a correction in long Peso positions rather than a structural shift towards the emerging market currency.

The Bank of Mexico's (Banxico) near-6.50% interest rate and the Federal Reserve's 3.75%-4% range, poised for another increase to 4%-4.25%, have reduced the differential to 2.50%, its lowest level post-Covid.