Background on Donald Trump and His Impact on Global Markets
Donald Trump, the former U.S. president (2017-2021), has had a significant influence on global markets, including currency exchange rates. His policies and trade negotiations have affected various countries’ currencies, with Mexico being one of them.
Mexican Peso’s Appreciation Against the US Dollar
In the first 90 days of Trump’s second presidency, the Mexican peso appreciated by 3.91% against the US dollar. This positive movement was primarily supported by Mexico’s exclusion from certain tariffs, high international reserves, expectations of lower interest rates, and the US dollar’s weakness.
Key Factors Contributing to Peso’s Appreciation
- Exclusion from Tariffs: Mexico was spared from some of Trump’s retaliatory tariffs, which positively impacted the peso.
- High International Reserves: Mexico’s higher-than-average international reserves relative to its economy bolstered the peso’s strength.
- Lower Interest Rate Expectations: Market expectations of the Bank of Mexico (Banxico) reducing interest rates in its upcoming May meeting contributed to the peso’s appreciation.
- US-China Trade Negotiations: Signals of potential US-China trade negotiations, with China showing willingness to discuss tariffs under certain conditions, also supported the peso.
Comparison with Other Currencies
Among other currencies, the Mexican peso ranked sixth in appreciation against the US dollar between January 20 and April 18, with gains of 3.91%. The ruble (27.66%), Swedish krona (13.16%), Swiss franc (10%), Japanese yen (9.79%), and Danish krone (9.23%) outperformed the peso during this period.
Expert Opinions
Gerardo Copca, Director of Analysis at MetAnálisis, highlighted that Mexico’s high international reserves and limited exposure to Trump’s tariffs contributed to the peso’s strength. He also mentioned that market expectations of further interest rate cuts by Banxico played a role.
CIBanco’s specialists pointed out that China’s readiness to negotiate with the US on tariffs, given certain conditions, also supported the peso. These conditions included a more coherent US stance and addressing China’s concerns regarding US sanctions and Taiwan.
Impact of Trump-Sheinbaum Call
Following a “very productive” call between President Donald Trump and Mexican President Claudia Sheinbaum, the Mexican peso continued to appreciate against the US dollar. On electronic trading on Sunday, the national currency was valued at 19.7038 pesos per dollar, marking a 1.29% gain compared to Banxico’s official closing, reaching its best level since October 15, 2024.
