Puerto Vallarta, Mexico – The Mexican peso regained strength against the US dollar on Tuesday morning, recovering some of the losses incurred during its worst session in seven months the previous day. The peso’s rebound comes amid ongoing concerns over the potential impact of US President Donald Trump’s tariff policies on trade in the region.
According to official data from the Bank of Mexico (Banxico), the spot exchange rate stood at 20.6061 pesos per dollar, marking an appreciation of 12.17 cents, or 0.59%, compared to Monday’s closing rate of 20.7278 pesos. The dollar traded within a range of 20.6163 to 20.7831 pesos during the session. Meanwhile, the Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.48% to 107.85 points.
Tariff Fears Weigh on Emerging Currencies
The peso’s sharp decline on Monday was triggered by renewed trade tensions between the US and Latin American countries, particularly Colombia. Over the weekend, a dispute between President Trump and Colombian President Gustavo Petro reignited fears of escalating tariffs, causing emerging market currencies, including the peso, to tumble.
“Today, the peso has partially recovered from the losses seen in the previous session, when markets evaluated the potential trajectory of tariff measures by US President Donald Trump on countries in the region,” noted Monex Grupo Financiero in a statement.
While Trump has yet to provide specific details, he reiterated on Monday his intention to impose a 25% tariff on imports from Mexico and Canada starting in February. He also signaled plans to tax semiconductors, pharmaceuticals, and steel in an effort to incentivize domestic production. Additionally, reports from the Financial Times suggest that Scott Bessent, Trump’s pick for Treasury Secretary, is advocating for universal tariffs on US imports, starting at 2.5% and increasing monthly.
Key Economic Data Awaited
Investors are closely watching upcoming economic announcements that could influence currency movements. On Wednesday, the US Federal Reserve is expected to announce its first monetary policy decision of the year, with analysts predicting that interest rates will remain unchanged. In Mexico, gross domestic product (GDP) data for the fourth quarter of 2023 will be released on Thursday, providing further insight into the country’s economic performance.
For the remainder of the day, Banco Base analysts anticipate the dollar to trade within a range of 20.59 to 20.76 pesos. Meanwhile, technical analysts at Vector Casa de Bolsa project that after testing the 20.90-20.75 peso zone, the dollar could weaken further, potentially reaching 20.45-20.40 pesos.
