The Mexican peso/yen exchange rate broke above the ¥9.4 level reached in July, climbing to its highest level since May 2024. As views spread that the pair had overcome the impact of yen-buying interventions by Japan and the US, the Bank of Mexico is expected to keep its policy rate at 6.50% and maintain the peso’s status as a high-yield currency amid delays in containing inflation.
The Mexican peso/yen exchange rate broke above the ¥9.4 level last week, reaching its highest level since May 2024. It is said to have recovered, in about 3 weeks, from a decline of up to approximately 4.5% following the yen-selling intervention at the end of July, while expectations of a September rate hike by the Bank of Japan increased and the yen’s rebound remained limited.
At its August meeting, the Bank of Mexico kept its policy rate unchanged at 6.50% and pushed back its inflation outlook to 2027. The minutes said that price increases in the services sector remained elevated in the 4% range and identified this as one of the factors hindering achievement of the inflation target.
The market views the central bank’s policy of maintaining the status quo as supporting the peso’s advantage as a high-yield currency, and many believe that the peso’s position remains firm. Going forward, the peso is likely to remain subject to developments in interest rates in Japan and the US, as well as inflation trends.
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