Background on Key Figures and Relevance
The Mexican peso has recently weakened against the US dollar due to investor caution stemming from escalating trade and political tensions between the United States and its key partners under the T-MEC (United States-Mexico-Canada Agreement).
Donald Trump, the former US President, hinted that his upcoming meeting with Chinese President Xi Jinping would focus on the fentanyl trafficking issue rather than trade matters. This development suggests that recent tariff disputes remain unresolved, keeping global investment flows uncertain and causing a slight appreciation of the dollar against emerging currencies.
Mexican Peso Performance and Market Interpretation
According to data from Banco de México (Banxico), the Mexican peso depreciated by 0.25% or 4.59 centavos, closing at 18.4411 pesos per dollar on Friday.
- Weekly Performance: The Mexican peso fell by 0.28% compared to the dollar, and with a week left in the month, it is on track for a 0.69% depreciation.
- Year-to-Date Performance: The Mexican peso has appreciated by 11.69% since the beginning of 2025.
The Intercontinental Exchange’s US Dollar Index (DXY), which compares the US dollar to a basket of six currencies, rose by 0.52% to 98.95 points during the week.
Currencies’ Performance
- Appreciating Currencies: The Russian ruble gained 2.03%, the Chilean peso increased by 1.68%, the Israeli shekel rose by 0.84%, the South African rand appreciated by 0.70%, and the Swedish krona gained 0.59%.
- Depreciating Currencies: The Argentine peso fell by 1.95%, the Japanese yen depreciated by 1.50%, the South Korean won dropped by 1.18%, the British pound weakened by 0.84%, and the Colombian peso declined by 0.57%.
Analyst Perspectives and Future Outlook
Felipe Mendoza, an analyst at ATFX LATAM, explained that the peso’s movement was primarily influenced by developments in the US-China relationship. He added that the market perceives unresolved trade tensions and global investment uncertainty, causing a slight dollar appreciation against emerging currencies.
Monex Casa de Bolsa analysts noted that the peso benefited from the US inflation report, which boosted investor expectations for potential monetary easing by the Federal Reserve. However, the peso’s advance moderated as market optimism waned.
Analysts from Monex Casa de Bolsa predict that the peso will fluctuate between 18.39 and 18.47 pesos per dollar, pending the release of Mexico’s trade balance report on Monday.
Key Questions and Answers
- Q: Why is the Mexican peso weakening against the US dollar? A: The peso is weakening due to investor caution caused by escalating trade and political tensions between the US and its key partners under the T-MEC.
- Q: What factors influenced the Mexican peso’s performance? A: The peso’s movement was primarily driven by developments in the US-China relationship, unresolved trade tensions, and global investment uncertainty.
- Q: How have other currencies performed in comparison to the Mexican peso? A: The Russian ruble, Chilean peso, Israeli shekel, South African rand, and Swedish krona appreciated against the dollar, while the Argentine peso, Japanese yen, South Korean won, British pound, and Colombian peso depreciated.
- Q: What do analysts predict for the Mexican peso’s future performance? A: Analysts from Monex Casa de Bolsa expect the peso to oscillate between 18.39 and 18.47 pesos per dollar, pending the release of Mexico’s trade balance report.
