The Mexican peso weakened on Thursday morning, losing ground after two consecutive days of gains. Global dollar strength influenced this decline, while investors prepared for Donald Trump’s upcoming inauguration as President of the United States.
The spot exchange rate reached 20.6585 pesos per dollar, a drop from the previous day’s close of 20.4915. This depreciation amounted to a loss of 16.70 cents, or 0.82 percent, according to data from the Bank of Mexico (Banxico).
The dollar traded within a range, peaking at 20.6578 and dipping to 20.4570 pesos. The U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, increased by 0.16 percent to 109.28 points.
As Trump prepares to take office for a second term on Monday, concerns loom over potential tariffs on major trading partners, including Mexico. Analysts noted that Trump might impose a 25 percent tariff on Mexican imports, prompting caution in the market.
This new political landscape reversed the peso‘s recent gains, which had been buoyed by U.S. inflation figures that sparked hopes for potential interest rate cuts by the Federal Reserve later this year.
Peso Decline Amid Global Economic Shifts
Analysts from Monex Grupo Financiero observed that the peso’s decline correlated with the strengthening dollar. This followed the release of U.S. consumer inflation data.
Additionally, expectations of an interest rate hike by the Bank of Japan next week added pressure on the peso. Such developments could undermine carry trade strategies that have supported the Mexican currency for years.
Experts from Banorte indicated that the dollar remained strong against most currencies in the G10 group. The exception was the Japanese yen, which appreciated due to anticipated rate hikes from Japan’s central bank.
Meanwhile, analysts at Ci Banco projected that the exchange rate could fluctuate between a maximum of 20.72 and a minimum of 20.52 pesos throughout Tuesday. Banco Base attributed this decline to a technical correction following recent peso gains.
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