Geopolitical Tensions and US Attacks on Iranian Nuclear Sites
The Mexican peso has weakened against the US dollar on Monday morning, as market participants remain vigilant regarding news from the Middle East following the US attacks on Iranian nuclear facilities over the weekend.
The spot exchange rate is currently at 19.2163 pesos per dollar, marking a decline of 4.80 centavos (or 0.25%) compared to Friday’s closing rate of 19.1683 pesos per dollar, according to the official data from Banco de México (Banxico).
The dollar’s price has fluctuated between a high of 19.2853 pesos and a low of 19.1619 pesos. Meanwhile, the Intercontinental Exchange’s Dollar Index (DXY), which compares the US currency to a basket of six currencies, has risen by 0.05% to reach 98.76 units.
US President’s Decision Sparks Market Surprise
One of the market’s major concerns materialized over the weekend when US President Donald Trump ordered attacks on three Iranian nuclear facilities. Although the White House stated that the US is not at war with Iran, there are fears of retaliation.
Analysts from Vector Casa de Bolsa noted, “President Trump’s decision surprised the markets, as just a week prior, it was expected that the US would take two weeks to decide on collaboration with Israel’s bombing campaign against Iran.”
Banco Base explained, “The peso’s depreciation is due to the increased risk aversion. The US’s direct involvement in the conflict between Iran and Israel raises the likelihood of a larger-scale conflict.”
Following the incident, Iran’s government stated that the US attack broadened the legitimate targets for its armed forces and labeled President Trump as a “gambler” for supporting Israel’s military campaign against Iran’s nuclear program.
Monex analysts highlighted, “Today, the Mexican peso is affected by the escalating geopolitical tensions in the Middle East, a factor that has increased global risk-aversion sentiment and impacted 91% of emerging currencies against the dollar.”
Anticipation of Banxico’s Policy Decision
Meanwhile, domestically, investors are preparing for Banxico’s policy rate decision on Thursday. Market expectations widely anticipate that the central bank will adjust the reference rate by half a percentage point due to the slowing economy.
