The Mexican peso has strengthened past 19.2 per USD in October, achieving a two-week high, propelled by expectations of persistent restrictive monetary policy and diminishing worries surrounding judicial reforms. Insights from Bank of Mexico Duty Governor Jonathan Heath, who has advocated for maintaining high interest rates, have enhanced prospects for foreign capital inflows.
Further bolstering the peso's performance was the Supreme Court's decisive 8-3 vote to revisit contentious judicial reforms that proposed electing rather than appointing judges, reducing fears regarding the indendence of the judiciary. Nonetheless, this review highlights the ongoing risks associated with Mexican assets as critics caution that these reforms could undermine institutional quality and economic stability. While Mexico currently holds an investment-grade rating, potential changes within the judicial framework could threaten this status if institutional decline transpires.
Meanwhile, Mexico's unemployment rate rose to 3% in August, marking its highest level in a year, although it remains below the long-term average.
The USDMXN exchange rate saw an increase of 0.1012 or 0.53% to 19.3703 on Monday, October 7, compared to 19.2691 the previous session. Analysts predict that the peso will trade at 20.11 by the end of this quarter, while projections for the next 12 months estimate it will reach 21.46.