If confirmed, the central bank will end the year with a reference rate of 7%. Since last week, the Mexican currency has broken below the 18-unit mark, leading to decreased market expectations for the year-end exchange rate. The peso is showing resistance to returning to the 18 units per dollar territory this Thursday amidst a surprise inflationary report in the United States and the expectation that the central bank in Mexico will cut interest rates again. According to data from the Bank of Mexico (Banxico), the exchange rate stood at 17.97 pesos per dollar on Thursday, after closing at 18 units the previous day, which reflects the weakening of the US dollar. This day's impact on the dollar is related to inflation data in the US, which shows a cooling, with an annual rate of 2.68%, breaking a five-month streak of consecutive accelerations and being the lowest inflation since June. The data surprised the market, as it was well below the expected inflation for November, which was around 3.06% annually. Similarly, underlying inflation was below general inflation for the first time since February 2023. In addition to these data, the exchange rate also reflects the market's expectation that another 25-basis-point cut in Banxico's interest rate is already priced in. It is worth remembering that this month's reading was affected by the government shutdown, which limited the release of economic indicators. Analysts speak of a 'structural change' in inflation that will lead Banxico to pause on rate cuts. During November, underlying inflation in the US stood at 2.63% annually, decelerating from the September figure of 3.02% and reaching its lowest level since March 2021. According to the latest Citi survey, specialists expect a rate of 18.37 units per dollar by the end of 2025. The data will be released at 13:00 today.
