Peso Hits Six-Month High as Negative Jobs Report Weakens Dollar

The Mexican peso has reached its strongest level against the dollar in six months. The currency gained 0.12% on Thursday, extending a rally that now spans ten consecutive days. This uptrend began after the central bank left interest rates unchanged at its August 6 monetary policy meeting.

The peso closed at 17.21 to the US dollar on Thursday and dipped below 17.14 in early trading on Friday, representing an additional 0.58% gain. This marks the currency's strongest level against the US dollar since February 23.

According to Forbes México, the peso is benefitting from a negative US jobs report, which showed a decline of 23,000 nonfarm payrolls last month. As a result, investors are reducing bets on higher US interest rates.

Gabriela Siller, director of analysis at Grupo Financerio BASE, attributes the peso's appreciation to the 'carry-trade,' a strategy where investors borrow money in currencies with low interest rates and invest it in higher-yielding assets or currencies. The wide interest rate differential between Mexico (6.50% policy rate) and the US (3.50%-3.75% target range) is also contributing to this trend.