Peso closes for the second day below the line of 19 units per dollar

The Mexican peso extended its cumulative advance into early 2023 on Thursday. The local currency gained ground against a dollar weakened, after the publication of US inflation data that showed a decrease in pressures in December.

The exchange rate ended this day at the level of 18.8476 units per dollar against a close of 18.9498 units yesterday, with official data from the Bank of Mexico (Banxico). For the coin this meant a gain of 10.22 cents or 0.54 percent.

The crossing operated in a limited range between a maximum of 18.9816 units and a minimum of 18.8173 units. The Dollar Index (DXY), which measures the greenback against a basket of six strong reference currencies, gave up 0.85% at the close to 102.31 points.

The inflation in the United States it fell in December to 6.5% in the 12-month measurement, marking its lowest level in more than a year. The data was the smallest increase in a 12-month period since October 2021, the Labor Department reported.

The dollar lost ground in the market in favor of assets considered risky due to general optimism in the expectation that the Federal Reserve (Fed) slow down its rate increases, in its fight to control the pressure on prices.

“The dollar weakens after the publication of the inflation data from the United States. With this downward trend in inflation, it is expected that the Fed will not be as aggressive in raising rates this year,” said Gabriela Siiller, director of Banco Base analysis.

Shortly after the data, Philadelphia Fed President Patrick Harker said the final stage of the central bank’s hike campaign was in sight. St Louis Fed chief James Bullard said at another event that rates will stay high for a while.

At its best level of the session, the Mexican currency reached a minimum not seen since the end of February 2020, almost three years ago. So far this year, it accumulates a profit of 66.13 cents or 3.39% against the official close of 19.5089 units in 2022.

“From our point of view, the Mexican peso remains significantly overvalued,” wrote economist Luis Adrián Muñiz in an analysis note from Vector Casa de Bolsa.

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