Mexican Peso Drops Over 2% Amid Concerns About Trump

The refusal by Colombian President Gustavo Petro to allow a U.S. military plane carrying deported migrants to land led to threats from Donald Trump of tariffs and other measures against the South American country.

In response, Colombia announced a 50% tariff on U.S. goods.

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The exchange rate closed the day at 20.7278 pesos per dollar, compared to Friday’s close of 20.2856 pesos, according to official data from the Bank of Mexico (Banxico). This movement resulted in a loss of 44.22 cents for the peso, equivalent to a 2.18% drop.

USD/MXN

Although the two governments of the U.S. and Colombia eventually reached an agreement, preventing the measures from being implemented, concerns over Trump’s return reignited. The Mexican peso depreciated after gaining more than 2% last week due to a lack of significant announcements from the Republican leader.

Trump’s message isn’t just for Colombia but for all countries, particularly in Latin America and Europe. His threats have become credible, with minimal cost to the United States.

This has heightened expectations and nervousness over the potential imposition of tariffs on Canada and Mexico starting in February. Emerging market currencies experienced widespread depreciation, with Trump remaining a key catalyst.

Mexican Peso Projections and Outlook

The weakening of the Mexican peso faced technical resistance at 20.90. While breaking this level is not the most likely scenario, the risk remains. If surpassed, the peso could drop to the next resistance level at 21.20 before entering a new recovery phase.

This week, investors are awaiting key economic information, including the Federal Reserve’s (Fed) monetary policy announcement, which is expected to keep interest rates steady. Locally, attention will focus on the Gross Domestic Product (GDP) report for the fourth quarter.

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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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