• Mexican Peso declines as Banxico cuts 2024, 2025 GDP forecast.
• Political unrest over judiciary reform and dismantling of autonomous bodies further pressures the Peso.
• Banxico sees inflation reaching 3% target by late 2025, with growth risks skewed downward due to slowing US economy.

The Mexican Peso depreciated against the Greenback on Thursday, with the latter extending its gains for the second straight day on robust US data. Meanwhile, the emerging market currency dropped after the Bank of Mexico (Banxico) revised Mexico’s growth expectations to the downside for the rest of 2024, according to its quarterly report. The USD/MXN trades at 19.77 and gains over 0.70%.

Mexico’s political turmoil continues to dampen the prospects of the Mexican currency. President-elect Claudia Sheinbaum reassured foreign investors that their investments are secure, even though she approves the judiciary reform and the bill for the dissolution of autonomous bodies pushed by President Andres Manuel Lopez Obrador.

In addition, Banxico downwardly revised the Gross Domestic Product (GDP) for 2024 from 2.4% to 1.5% and from 1.5% to 1.2% for 2025 after revealing its Q2 2024 quarterly revision.

In the report, policymakers mentioned that “national economic activity is going through a period of market weakness and uncertainty.” They revisited inflation expectations higher and expect it to hit the bank’s 3% goal toward the end of 2025.

Furthermore, they added that risks to growth are tilted to the downside, adding that an economic deceleration in the US economy weighs on Mexico’s economic outlook.