Background on Key Figures and Context
The Mexican peso has been weakening against the US dollar on Friday, as global markets show risk aversion due to potential impacts from tariffs imposed by US President Donald Trump on numerous countries, including Mexico.
President Trump recently granted Mexico a 90-day extension on tariffs for its imports to negotiate a long-term trade agreement. However, he increased tariffs on several partners, with key countries like Canada, Brazil, India, and Taiwan facing higher rates.
Current Exchange Rate Situation
The spot exchange rate currently stands at 18.8995 pesos per dollar, representing a loss of 3.15 centavos (0.17%) compared to the previous day’s closing rate of 18.8680 pesos, according to data from Mexico’s central bank, Banxico.
The dollar’s price fluctuates between a high of 18.9810 pesos and a low of 18.7514 pesos. The Dollar Index (DXY) from the Intercontinental Exchange, which measures the dollar against a basket of six reference currencies, has dropped 1.13% to 98.93 points.
Market Reaction and Recent Job Report
In a volatile market concerned about the potential consequences of a trade escalation between the US and affected countries, as well as global economic growth costs, the Mexican peso depreciated earlier in the day. The currency hit its worst level in over a month.
Later, a US labor report helped mitigate losses. Nonfarm payrolls added only 73,000 jobs last month, far below the expected 100,000. The unemployment rate was 4.2%, up from 4.1% in the previous month.
Expert Analysis
“Today, the peso is being affected by risk aversion towards risky assets due to the imposition of multiple tariffs next week, although the dollar’s correction following the employment report’s evaluation pushed the exchange rate down,” explained Monex.
Key Questions and Answers
- Q: Who is Donald Trump and why is he relevant in this context?
Donald Trump is the President of the United States. In this context, he is relevant because he has imposed tariffs on numerous countries, including Mexico, causing global market risk aversion and affecting the Mexican peso’s value against the US dollar.
- Q: What is the current exchange rate situation between the Mexican peso and the US dollar?
The spot exchange rate currently stands at 18.8995 pesos per dollar, representing a loss of 3.15 centavos (0.17%) compared to the previous day’s closing rate of 18.8680 pesos, according to data from Mexico’s central bank, Banxico.
- Q: How did the recent US labor report impact the Mexican peso?
The US labor report showed that only 73,000 jobs were added last month, far below the expected 100,000. This led to a weaker US economic outlook, which in turn helped mitigate losses for the Mexican peso against the US dollar.
- Q: What is the Dollar Index (DXY) and how does it relate to this situation?
The Dollar Index (DXY) measures the dollar’s strength against a basket of six reference currencies. In this case, it has dropped 1.13% to 98.93 points, indicating a weakening US dollar and contributing to the Mexican peso’s depreciation.
