Mexico's reserves fall as monetary base also contracts in the week

Banco de México published preliminary weekly account balances for Friday, Oct. 23, on Oct. 27. International reserves fell by $61 million during the week to $257.016 billion. The monetary base, which includes banknotes and coins in circulation plus current-account deposits of commercial and development banks at the central bank, declined by 12.103 billion pesos to 3.509 trillion pesos. The bank reported the monetary base's annual change at 7.1%; its balance was 231.834 billion pesos higher than on the same date a year earlier.

The reserve balance remained higher than at the start of the year. Banco de México said the $257.016 billion balance on Oct. 23 was $5.141 billion above its level at the end of 2025. A weekly decline can therefore coexist with a year-to-date increase: the weekly movement compares the balance with the prior Friday, while the cumulative difference compares it with the year-end 2025 close. The report presents reserves in U.S. dollars and also shows their peso equivalent in its balance-sheet table.

The central bank identified two components behind the weekly reserve decrease. Dollar sales by the Mexican Petroleum Fund to Banco de México added $131 million to reserves. Changes in the valuation of international assets, mainly, reduced them by $192 million. The net of those items was a $61 million weekly decline. The release does not describe this movement as a new foreign-exchange intervention or public expenditure; its balance-sheet notes distinguish transactions from valuation effects.

The peso value of the reserve line increased by 43.593 billion pesos during the same week even as the reserve balance measured in dollars declined. Banco de México attributed the difference to a higher peso valuation of the reserve assets following depreciation of the national currency. The two reported changes express the reserve position in different currencies and therefore do not directly contradict each other. A currency-translation effect in the balance sheet is different from a new inflow of dollars into reserves.

The release also separated the components of the monetary-base decline. The balance of banknotes and coins in circulation fell by 13.295 billion pesos, while commercial banks' current-account deposits at Banco de México increased by 1.191 billion pesos, leaving the total monetary base down 12.103 billion pesos. In the same week, open-market operations offset a net 314.419 billion peso contraction in liquidity. The bank said this reflected a 326.522 billion peso contraction, mainly from funds deposited in the Treasury account and other operations, partly offset by a 12.103 billion peso expansion as public demand for cash decreased.

The release identifies the figures as preliminary weekly account balances. Under Banco de México's statutory definition, international reserves are calculated as gross reserves minus liabilities with maturities of less than six months. The monetary base comprises currency in circulation and banks' current-account balances at the central bank. Those definitions clarify why the reserve total should not be read as a general investment portfolio or the monetary base as the amount of bank loans to customers. The release provides a balance-sheet view through Oct. 23; it is not an economic forecast.