Exchange rate: Dollar closes higher after announcement of interest rate cut by the Central Bank of Mexico

The spot dollar had an afternoon of contained fluctuations, remaining stable until gaining a little strength in the domestic market during the last hour of business. This movement partially followed the appreciation of the American currency in relation to the Mexican peso, after the Central Bank of Mexico announced an interest rate cut.

With a minimum recorded at R$4.9509 and a maximum at R$4.9858 during the morning, the spot dollar ended the session quoted at R$4.9793, showing an increase of 0.11%.

During the week, the currency accumulates a drop of 0.37%. Despite the slight advance today, the real outperformed other Latin American currencies and most emerging currencies and commodity exporters.

Opposing forces move the market

Analysts point out that the formation of the exchange rate today was influenced by opposing forces. On the one hand, the real was pressured by the advance of the dollar against strong currencies, especially due to the weakness of the euro and the Swiss franc, after the Swiss Central Bank promoted an unexpected interest rate cut. On the other hand, positive signals were emitted in monetary policy decisions in both Brazil and the United States.

Experts’ opinion

According to Felipe Garcia, head of the operations desk at C6 Bank, the foreign exchange market had a day of adjustments after the dollar’s fall yesterday, driven by the Fed’s decision. He highlights that, although the dollar is stronger internationally, the real has stay behaved. Marcos Weigt, from Travelex Bank’s Treasury, notes that the real outperformed today in relation to other emerging currencies, attributing this to Copom’s more “hawkish” stance.

Impact of the interest rate cut in Mexico

The Central Bank of Mexico announced today, at 4pm, a reduction in the interest rate by 25 basis points, to 11%, as expected by the market. This means that Mexico continues to have higher interest rates than Brazil, which could keep the Mexican peso outperforming the real in the coming months.