2026.07.1720:25:26UTC+00Mexican Peso Retreats as Risk Aversion Boosts Dollar

The Mexican peso weakened to 17.52 per USD in July, after briefly strengthening to 17.40 earlier in the month, as rising tensions in the Middle East spurred risk aversion across global financial markets. Heightened geopolitical risks drove investors toward safe-haven assets, notably the US dollar. At the same time, Mexico’s industrial output contracted more than anticipated in May, with broad-based weakness across sectors, adding pressure on the peso and reinforcing concerns about a slowing domestic economy. Oil prices also extended their gains as tensions near the Strait of Hormuz intensified, amplifying fears of energy-driven inflation. In contrast, Mexico’s annual inflation rate eased to 3.37% in June 2026 from 3.94% in May, marking its lowest level since December 2020. The reading was slightly below market expectations of 3.52% and remained within the Bank of Mexico’s target tolerance band of one percentage point around the 3% midpoint.