Background on Trade Tensions and Donald Trump’s Tariffs
Trade tensions between the United States and other countries have been a significant factor influencing global currency markets. Former U.S. President Donald Trump imposed tariffs on various countries, causing uncertainty and volatility in international trade. However, a recent decision by the U.S. Court of International Trade to annul these reciprocal tariffs due to excessive use of power, initially boosted the Mexican peso.
Gabriela Siller’s Perspective
According to Gabriela Siller, director of Analysis at Banco Base, there is increased optimism regarding the suspension of tariffs. However, concerns remain about Trump’s potential response beyond the appeal, fearing that the court ruling might lead to a more radical implementation of economic policies.
Mexican Peso’s Performance
On Thursday, the Mexican peso appreciated against the U.S. dollar, supported by the overall weakening of the greenback due to growing optimism about global trade. According to data from Banco de México (Banxico), the Mexican currency closed at 19.3116 pesos per dollar, marking a 0.53% or 10.29 centavos appreciation.
The U.S. Dollar Index (DXY), tracked by the Intercontinental Exchange, which measures the U.S. dollar against a basket of six major reference currencies, fell 0.55% to 99.33 points.
Among the major currency pairings, the Brazilian real (-0.96%), Mexican peso (-0.53%), Czech crown (-0.52%), Hungarian forint (-0.38%), Chilean peso (-0.37%), and Japanese yen (-0.37%) experienced the most significant depreciation.
Conversely, the Russian ruble (+0.66%), Israeli shekel (+0.65%), Malaysian ringgit (+0.34%), New Zealand dollar (+0.17%), Taiwanese dollar (+0.15%), and South African rand (+0.13%) were the most appreciated currencies on Thursday.
Court of Appeals Reinstates Tariffs
However, later on Thursday, a U.S. court of appeals reinstated the tariffs pending further proceedings, raising uncertainty once again.
Analysts’ Outlook on Peso’s Performance
Monex Casa de Bolsa analysts stated that if the conditions of peso appreciation or dollar weakness persist in the short term, the exchange rate will validate supports at 19.11 and 19.03 pesos per dollar before attempting to break the psychological barrier of 19.00 pesos.
They also mentioned that a potential strengthening in investor confidence in the peso or dollar appreciation would seek resistances at 19.64 and 19.70 pesos.
