Puerto Vallarta, Mexico – The Mexican peso closed last week with a depreciation of 3.11% against the U.S. dollar, settling at 19.8860 pesos per dollar compared to 19.8807 the previous day, according to the Bank of Mexico (Banxico). This marginal decline of 0.03% reflects growing market concerns over the potential return of former President Donald Trump to the White House. Over the weekend the peso was quoted at 19.99 pesos per dollar.
“Trump’s comments on Mexico have gained relevance, as he continues to threaten to impose tariffs to curb investment in Mexico and has described the country as a threat to the United States,” said Gabriela Siller, director of analysis at Banco Base.
She added that while Trump’s previous administration did not always follow through on threats and even favored Mexico by signing the USMCA, his current rhetoric is causing uncertainty. “In the short term, risk aversion may cause the market to reduce its positions in favor of the Mexican peso, causing upward pressure on the exchange rate,” Siller noted.
The Intercontinental Exchange’s Dollar Index (DXY), which measures the greenback against six major currencies, fell 0.35% to 103.46 points, indicating mixed sentiment in the currency markets.
With less than a month before the U.S. presidential elections, the environment is shrouded in “a lot of uncertainty” due to polls showing a “technical tie,” according to a report by Banorte. “There has been a sharp change in the signals being sent by the betting market, now leaning towards a Trump victory. However, the difference between the various bookmakers is very wide and leaves many doubts on the table,” the financial group stated.
On the Chicago Mercantile Exchange (CME), futures contracts favoring the Mexican peso fell 13.70% last week, dropping from 29,200 contracts to 25,200. Year-to-date, these contracts have plummeted by 71.27% since December 29, 2023, when 87,700 contracts were offered.
Gabriela Siller pointed out that risk aversion toward the Mexican currency is also fueled by internal politics, such as the upcoming presentation of the Economic Package for 2025 to Congress and developments regarding judicial branch reforms. “The market is awaiting the presentation of the Economic Package for 2025 on November 15. Likewise, the internal political situation could generate nervousness in the financial market,” she added.
Market analysts suggest that investors are closely monitoring both external and internal factors influencing the peso’s performance. The combination of U.S. political uncertainty and domestic economic policies is contributing to increased volatility in the currency markets.
Puerto Vallarta, Mexico - The Mexican peso closed last week with a depreciation of 3.11% against the U.S. dollar, settling at 19.8860 pesos per dollar compared to 19.8807 the previous day, according to the Bank of Mexico (Banxico). This marginal decline of 0.03% reflects growing market concerns over the potential return of former President Donald Trump to the White House. Over the weekend the peso was quoted at 19.99 pesos per dollar.
