### Dollar to Experience Low Volatility Until 2025
The U.S. dollar is expected to remain in a period of low volatility until at least November 15, 2024, with a potential continuation until 2025. This is largely dependent on the upcoming presentation of Mexico’s 2025 economic package by the federal government, as noted by economist Jorge Fonseca.
Speculations suggest the budget could reach up to 10 trillion pesos. This announcement will be critical as markets closely watch the allocation of funds across different sectors, which will provide insights into the direction of Mexico’s economy and subsequently influence the value of the American dollar.
Fonseca emphasized the importance of the economic package lacking any unforeseen elements, which would help stabilize the exchange rate around or below 19 pesos per dollar by December. The Mexican peso, which has depreciated slightly more than anticipated, has inadvertently benefitted exporters and the manufacturing sector across Baja California, particularly in Tijuana and Mexicali, by boosting employment opportunities.
Conversely, importers have faced increased costs compared to the exchange rate before the 2024 elections when it averaged at 17 pesos per dollar. The current exchange rate is slightly above 19 pesos due to reduced volatility following a 50 basis point cut by the U.S. Federal Reserve, setting interest rates between 4.75% and 5%.
This policy adjustment provides relief to U.S. consumers and border residents reliant on imports, easing monetary policy pressures. As markets await decisions from the new administration, confidence hinges on the forthcoming federal budget announcement, anticipated by November 15.
### Market Updates: Dollar and Economic Trends
In addition to the focus on Mexico’s economic package, recent global trends reveal a more comprehensive picture of currency dynamics. The U.S. Federal Reserve’s interest rate policies continue to be a significant factor influencing the dollar’s strength.
Reports indicate that competitive interest rates are maintaining international confidence in the U.S. economy, impacting the dollar’s value globally. Additionally, global trends show ongoing concerns about inflation rates and their effects on currency strength and investor confidence.
Overall, while the Mexican peso faces pressures from both internal budgetary decisions and external economic conditions, the relative stability of the dollar, influenced by U.S. monetary policy, remains a key factor for international currency markets as 2025 approaches.
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