Mexican Peso Closes with a Modest Drop, Watchful of Tariffs

The local currency fell in a volatile session, reacting to threats from U.S. President Donald Trump against Mexico, as well as a call for calm from President Claudia Sheinbaum.

The Mexican peso depreciated in Tuesday’s trading session. The USD/MXN experienced a volatile session, reacting to threats from U.S. President Donald Trump against Mexico, alongside a call for calm from President Claudia Sheinbaum.

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Exchange Rate Activity

The exchange rate closed the session at 20.6457 pesos per dollar. Compared to yesterday’s closing level of 20.5180 pesos, according to data from the Bank of Mexico (Banxico), this represented a decline of 12.77 centavos, equivalent to a 0.62% drop.

USD/MXN

The dollar traded within a range, reaching a high of 20.8022 pesos and a low of 20.4803 pesos. The U.S. Dollar Index (DXY) from the Intercontinental Exchange, which compares the dollar against six major currencies, fell marginally by 0.03% to 108.05 points.

Uncertainty and Currency Outlook

On Monday, Donald Trump announced that his administration was considering imposing a 25% tariff on goods imported from Mexico and Canada starting next month. The possibility of these tariffs impacting the local economy pushed the peso up by more than 1.4% to its session high.

Later, the currency pared its losses following comments from President Claudia Sheinbaum, who urged maintaining a “cool head” and focusing only on official decrees, which truly impact bilateral relations, rather than reacting to Trump’s rhetoric.

Mexico’s productive activity is closely tied to U.S. demand, with nearly 85% of its exports destined for the American market. An increase in tariffs would reduce the country’s exports to the U.S. and put pressure on the peso. Given the prevailing uncertainty, the peso is expected to fluctuate within a range of 20.60 to 20.80 pesos in the short term.

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ABOUT THE AUTHOR See More
Ignacio Teson
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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