Background on the Mexican Peso and its Recent Performance
The Mexican peso concluded July with a depreciation of 0.55% or 10.26 centavos against the US dollar, following six consecutive months of appreciation. This shift was influenced by global risk aversion stemming from US President Donald Trump’s protectionist trade policies.
Key Figures and Data
- July’s closing exchange rate: 18.8680 pesos per dollar (a slight 0.06% or 1.13 centavos depreciation from June 30)
- Year-to-date appreciation: 9.64%
- DXY Index: Increased 3.18% to 99.97 units in July (comparing the US dollar with a basket of six major currencies)
- Mexican peso was the second least-depreciated currency in July, with these major currencies experiencing the following depreciation rates:
- Japanese yen: 4.93%
- South African rand: 3.63%
- Danish krone: 3.37%
- Euro: 3.34%
- Brazilian real: 3.21%
- British pound: 3.17%
- Swedish krona: 2.90%
Global Risk Aversion and Trade Policies
Gabriela Siller, director of Analysis at Banco Base, highlighted that “July was marked by an increase in global risk aversion due to US President Donald Trump’s protectionist trade policies.”
She further explained that “On July 9, the 90-day extension for reciprocal tariffs expired, postponed until August 1. Additionally, Trump began sending letters to various countries outlining the tariffs they would have to pay starting August 1.”
Some countries reached agreements with the US during July, reducing the tariffs they were supposed to pay according to Trump’s letters. Felipe Mendoza, analyst of Financial Markets at ATFX LATAM, noted that the Mexican peso was conditioned by international factors during July due to Trump’s renewed focus on tariffs.
Mendoza added, “Trump imposed new tariffs on copper, aluminum, and steel products. Although he granted Mexico a 90-day extension in some cases, he maintained the 25% auto tariff and 50% metal tariffs, causing uncertainty about trade stability between the two countries.”
Impact on Mexican Peso and Future Outlook
Despite the July depreciation, the Mexican peso has appreciated 9.64% year-to-date. The ongoing trade tensions and Trump’s protectionist policies will likely continue to influence the peso’s performance in the coming months.
Key Questions and Answers
- Q: What was the main reason for the Mexican peso’s depreciation in July?
A: Global risk aversion due to US President Donald Trump’s protectionist trade policies, including the threat of new tariffs on various goods and postponement of existing tariffs.
- Q: How has the Mexican peso performed year-to-date?
A: The Mexican peso has appreciated 9.64% year-to-date.
- Q: Which major currencies depreciated the least in July?
A: The Mexican peso was second to the Hong Kong dollar, which did not depreciate against the US dollar, in terms of least depreciation during July.
