Anna 
On Tuesday, the Mexican Peso (MXN) continued its ascent, reaching levels not seen in almost nine years against the US Dollar (USD), bolstering its long-standing bullish trend.
Investors are eagerly awaiting the release of Mexican inflation data for March, scheduled for 12.00 GMT, as it carries significant weight in shaping the outlook for interest rates in the country. This, in turn, plays a pivotal role in determining foreign exchange valuations.
As anticipation builds, the Mexican Peso rallies in anticipation of the forthcoming Consumer Price Index (CPI) data. The currency’s performance is poised to react to any significant deviation from analysts’ expectations in the inflation rate.
Projections suggest that Mexican Headline Inflation is poised to climb by 0.36% Month-on-Month (MoM) in March, following a modest 0.09% uptick recorded in February. Similarly, Core Inflation is forecasted to increase by 0.51%, up from a 0.49% rise in the previous month.
The Mexican Peso is likely to see further appreciation if inflation figures surpass expectations, signaling a need for the Banco de Mexico (Banxico) to maintain higher interest rates for an extended period. Elevated interest rates typically attract greater foreign capital inflows, thereby bolstering demand for the currency.
Although Banxico opted to reduce interest rates from 11.25% to 11.00% during its March meeting, citing a gradual decline in inflation, the meeting minutes underscored a data-dependent approach to future policy decisions. Furthermore, the central bank emphasized that the overall inflation outlook remains elevated, suggesting a cautious stance moving forward.
As the Mexican Peso continues its ascent against the US Dollar, investors remain attuned to the forthcoming CPI data release, poised to react to any developments that may shape the trajectory of interest rates and currency valuations in Mexico.
