Puerto Vallarta, Mexico – The Mexican peso bounced back on Wednesday, recovering some of the losses caused by newly announced U.S. tariffs that had driven the currency to its weakest level since mid-2022. The peso was trading around 20.41 per U.S. dollar, about 0.5% stronger on the day, nearly reaching levels seen late last week.
The brief rally comes one day after U.S. President Donald Trump imposed 25% tariffs on most imports from Mexico and Canada, a move that rattled markets and surprised investors expecting a last-minute compromise. The peso, which ended Tuesday’s session on a stronger note, found support following comments from U.S. Commerce Secretary Howard Lutnick. In an interview with Fox Business, Lutnick indicated the United States, Canada, and Mexico were likely to strike middle ground on tariff issues, suggesting an announcement could arrive as early as Wednesday.
“The peso is now back at 20.41, which seems like a magic line that dollar/peso converts back to no matter what happens,” said Michael Pfister, a currency strategist at Commerzbank. He cautioned, however, that if tariffs are applied permanently, the currency could once again weaken toward the 21-per-dollar mark.
Investors’ attention now shifts to the broader impact of tariffs on the U.S. economy, which has shown signs of slowing. “The market is now a little more skeptical of high tariffs given that the U.S. economy is slowing down a bit,” Pfister added.
Meanwhile, the dollar index fell 0.4% on Wednesday, extending its three-day loss to 2.23%—the largest drop in that timeframe since late 2022. Some analysts believe it may reflect growing caution over possible retaliatory measures from trading partners.
“New tariffs on Mexico may not become a permanent feature of U.S. trade policy, although it is uncertain how long they would last,” wrote Goldman Sachs economist Alberto Ramos in a research note. The possibility of a negotiated settlement, paired with market skepticism about the durability of the tariffs, has helped the peso regain traction for now.
Still, investors remain on edge, watching for any developments from Washington that could either solidify the peso’s recovery or send it tumbling once more.
