Puerto Vallarta, Mexico - The Mexican peso showed a significant recovery against the US dollar yesterday, trading at 20.34 pesos per dollar on the international Forex market. The shift comes in the wake of former U.S. President Donald Trump's remarks during his participation in the World Economic Forum in Davos.
Trump praised his administration's relationship with Mexico while expressing less favorable sentiments toward Canada. These comments appeared to influence the exchange rate, which had previously hit 20.74 pesos per dollar on January 20, coinciding with Trump’s inauguration.
The 40-cent recovery in the peso's value is being linked to Trump’s statements, as experts noted that domestic economic indicators, such as Mexico's inflation data showing a national slowdown at an annual rate, failed to make a significant impact on the currency market.
Gabriela Siller Pagaza, director of economic analysis at Grupo Financiero Base, emphasized that the peso’s performance is increasingly tied to U.S. policies and statements.
“The exchange rate did not react this time to the publication of inflation in Mexico. The market is now focused on Trump, on the possibility of imposing tariffs or that he wants to bring forward the revision of the T-MEC [USMCA],” Siller explained.
The current interbank exchange rate positions the U.S. dollar at 19.71 pesos for purchase and 20.98 pesos for sale. Meanwhile, in Ciudad Juárez’s exchange centers, the dollar is trading at 19.80 pesos for purchase and 20.80 pesos for sale.
A Focus on Tariffs and Trade
Trump’s continued threats to impose tariffs as a strategy to bring manufacturing jobs back to the United States remain a source of market volatility. Despite these tensions, his comments in Davos also pointed to promises of bolstered investment within the U.S., alongside reduced inflation and lower interest rates.
Economic analysts are closely watching the implications of Trump’s remarks on the future of the U.S.-Mexico-Canada Agreement (USMCA). Uncertainty surrounding potential changes to the trade deal or the imposition of new tariffs could bring further fluctuations in the peso's value.
The peso’s recent movements underscore the currency's sensitivity to international political developments, particularly those involving the United States. As markets remain fixated on the potential ramifications of Trump's policies, Mexico’s domestic economic data has taken a backseat in influencing the currency’s performance.
For now, the peso’s recovery reflects market optimism tied to the stability of Mexico-U.S. relations, but the potential for further turbulence remains if significant policy changes are enacted in the weeks to come.
