Mexican Peso Drops After Fed Minutes

The Mexican peso weakened against the U.S. dollar on Wednesday as traders reacted to key economic reports and fresh tariff threats from U.S. President Donald Trump.

The exchange rate closed at 20.4465 pesos per dollar, marking a 0.86% decline from Tuesday’s close of 20.2732, according to official data from the Bank of Mexico (Banxico). The peso lost 17.33 centavos, breaking a six-session winning streak.

Inflation, the Fed, and Trump’s Trade Policy

Trump announced plans to impose a 25% tariff on automobiles, as well as similar levies on semiconductors and pharmaceutical imports—moves that could disrupt global trade.

Meanwhile, investors analyzed minutes from the latest Federal Reserve (Fed) meeting, which highlighted concerns over inflationary risks. Fed officials cited potential impacts from trade and immigration policy shifts, geopolitical tensions, and stronger-than-expected consumer spending.

Peso Faces Market Uncertainty

Before Wednesday’s drop, the peso had gained 1.60% over six sessions, strengthening from 20.5979 per dollar on February 10. While the currency has shown resilience, uncertainty over which countries will be affected by Trump’s tariffs could add pressure in the coming days.

Financial markets reflected broader caution, with gold hitting new record highs as investors sought safe-haven assets.

Banxico Lowers Growth Forecast

Locally, markets reacted to Banxico’s quarterly report, in which the central bank halved its 2025 growth forecast, cutting it from 1.2% to 0.6%. The bank warned of moderate economic expansion in the coming years.

Banxico attributed this expected weakness—particularly in the first half of the year—to declining consumption and private investment, citing an environment of “heightened uncertainty” linked to U.S. policy shifts under the new administration.

ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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