Puerto Vallarta, Mexico – The Mexican peso appreciated against the dollar on Tuesday, buoyed by lower-than-expected producer price data in the United States and speculation regarding a gradual implementation of tariffs by the incoming U.S. administration.
According to the Bank of Mexico (Banxico), the exchange rate closed at 20.5311 pesos per dollar, marking a gain of 19.24 cents or 0.93% from Monday’s close of 20.7235 units. During the day, the peso traded within a range of 20.4532 and 20.6704 pesos per dollar.
Dollar Weakens Amid U.S. Producer Price Data
The Dollar Index (DXY), which measures the greenback against a basket of six major currencies, fell by 0.36% to 109.21 points. This decline came after the U.S. Department of Labor reported a modest 0.2% increase in the producer price index (PPI) for December, below the 0.3% rise expected by analysts surveyed by Reuters.
The lower-than-anticipated PPI bolstered expectations that inflationary pressures in the U.S. may be easing. Market participants are now focused on the upcoming release of the U.S. Consumer Price Index (CPI) on Wednesday, a key indicator that could provide further insights into the Federal Reserve’s (Fed) monetary policy trajectory.
“Attention is now focused on the release of consumer price data and Fed members’ speeches this week, which will offer clues about the direction of rates in 2025,” said Quásar Elizundia, markets strategist at Pepperstone.
Impact of Tariff Speculations on the Peso
In addition to favorable economic data, the peso gained strength following reports suggesting that the U.S. president-elect’s team is considering a phased implementation of tariffs to avoid triggering an inflationary shock.
“Today, the peso found support in the retreat of the dollar, after more rumors were published that Trump would consider a gradual implementation of tariffs, with the aim of avoiding an inflationary shock,” noted Monex Grupo Financiero in an analysis.
These developments have eased market concerns regarding potential trade disruptions between Mexico and the United States, Mexico’s largest trading partner.
Outlook for the Peso
As the week progresses, all eyes remain on the U.S. CPI release and Federal Reserve members’ comments, which could influence global currency markets. The peso’s performance will likely continue to be shaped by these factors and any new developments in U.S. trade policy.
For now, the Mexican peso’s gain reflects market optimism and a favorable shift in external conditions, providing a positive start to the week for Mexico’s currency.
Puerto Vallarta, Mexico - The Mexican peso appreciated against the dollar on Tuesday, buoyed by lower-than-expected producer price data in the United States . . .
