Mexican Peso Depreciates to 18 USD Amid Oil Price Hikes and Fed Fears
The Mexican peso has taken a hit, depreciating to a rate of 18 to the US dollar on Monday. This represents a weakening of more than 1% compared to Friday and over 6% compared to its strongest position this month.
According to Bloomberg, at 3 p.m. Mexico City time, the peso was trading at 17.99 to the US dollar, while Banxico's closing rate was 17.94, a depreciation of 1.3% compared to Friday's closing rate.
Gabriela Siller, director of economic analysis at Banco Base, attributed the peso's decline on Monday to increased risk aversion, higher oil prices following US President Donald Trump's rejection of an Iranian proposal to reopen the Strait of Hormuz within seven days, and expectations of a more restrictive US Federal Reserve.
The Fed raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4% earlier this month, narrowing the difference between Banxico's key interest rate (6.50%) and that of the Fed.