Puerto Vallarta, Mexico – The Mexican peso continued its downward slide on Wednesday, briefly crossing the psychologically significant 21-peso-per-dollar threshold. The weakness in the currency comes as investors worry about the Trump administration’s intensifying trade dispute with China and the potential economic fallout.
According to the Bank of Mexico (Banxico), the spot exchange rate stood at 20.9145 pesos per dollar, representing a loss of 10.62 cents, or roughly 0.5%, compared to Tuesday’s official close of 20.8083. During the session, the peso fluctuated between a high of 21.0809 and a low of 20.7565. Meanwhile, the Dollar Index (DXY), which measures the greenback against six major currencies, slipped 0.67% to 102.28.
Trade War Concerns Intensify
On Tuesday, the United States raised tariffs on Chinese goods to 104% in response to Beijing’s decision not to roll back its own retaliatory measure—an existing 34% tariff in retaliation for Washington’s initial 54% tariff hike. China hit back swiftly with tariffs of 84%, raising the prospect of a prolonged trade conflict. The escalating tension has rattled global markets, contributing to four consecutive sessions of peso declines that together have added up to a 5% drop against the dollar.
“Today, the peso is being affected by the escalating trade war between China and the United States,” analysts at Monex said. “Additionally, local inflation showed a rebound during March, highlighting the impact of the first tariffs on prices in our country.”
Banxico and Inflation
A new inflation report from Mexico pointed to rising price pressures, heightening expectations that Banxico may opt to cut its benchmark interest rate by another 50 basis points. Currency traders see the possibility of further monetary easing as another factor weighing on the peso.
Eyes on the Fed
Market participants are also awaiting the release of minutes from the Federal Reserve’s most recent monetary policy meeting later today. While the Fed kept interest rates steady, it raised its inflation outlook—news that could signal a more hawkish stance in the future.
“Today, the market will remain attentive to the release of the minutes from the Federal Reserve’s March meeting, looking for signals about its stance on the potential impacts of new trade policies,” Actinver analysts noted in a report.
For now, the peso remains under pressure from a mix of global trade tensions and domestic economic considerations, leaving traders closely watching both Banxico’s next moves and any fresh developments in the trade dispute between Washington and Beijing.
