The economy could give a much-needed boost to the Mexican peso in the coming days, according to specialists. The peso has struggled to return to the area of 16 units in recent weeks, but experts believe that US inflation data for January could help the peso strengthen.
If the US economy’s price index stands at 2.9 percent at an annual rate in January, the dollar would weaken, pushing the exchange rate in Mexico towards the support of 16.90 pesos. This could help the peso break the psychological level of 17 pesos per dollar and head towards the desired level of 16 units.
The Federal Reserve’s interest rate policy is also closely linked to the issue of inflation. It seems that the “vibe” surrounding inflation in the US is causing ordinary consumers to expect lower inflation. In fact, medium-term inflation expectations in January were the lowest recorded in nearly 11 years of data.
The US Central Bank has consistently emphasized that it wants to see inflation decline further before entering a bearish cycle. As a result, the expectation is that interest rate cuts will begin in May, as Americans’ inflation expectations for everyday goods like food and gasoline have fallen.
The hope is that these factors will contribute to a much-needed boost for the Mexican peso, which has been struggling in recent weeks.