Mexican peso marginally advances amid wage adjustments – London Business News | Londonlovesbusiness.com

The Mexican peso continues to advance, recording marginal gains against the U.S. dollar midweek, trading around 20.3 pesos per dollar.

This appreciation occurs in a context where the dollar remains broadly strong, highlighting the relatively favorable performance of the Mexican currency.

One of the favorable factors for the MXN during the session is the recent announcement of new minimum wage levels in Mexico for 2025.

This 12% increase will raise the daily wage from $248.93 to $278.80 starting on January 1st. The measure, unanimously approved by businesses, unions, and the government, aims to increase workers’ purchasing power and reduce economic inequality.

However, it is important to note that while higher wages may generate positive economic momentum, there is also the risk of inflationary pressures, especially considering the increase far exceeds the estimated inflation of 3.5% for December 2025.

This balance between purchasing power growth and inflationary risks seems to factor into several key economic considerations, including potential trade challenges for Mexico’s economic stability in the coming year. Despite efforts by the Bank of Mexico to control inflation, pressures remain above target levels.

The implementation of higher wages could enhance purchasing power, but there is also the possibility that demand for goods and services could outpace supply, driving prices higher.

In this context, the performance of the Mexican peso and inflation will be key indicators to monitor as we move into 2025 and the new wages come into effect. Naturally, if inflation faces renewed upward pressures, this could lead the Banxico to halt its normalization cycle and maintain higher rates, potentially boosting the MXN’s appeal.