Overview of the Mexican Peso’s Recent Fluctuation
The Mexican peso experienced a slight depreciation against the US dollar during the first trading session of the week. This decline was attributed to the strengthening of the greenback following the postponement of the deadline for implementing tariffs by US President Donald Trump.
By the end of the day, the exchange rate stood at 18.6435 pesos per dollar, marking a decrease of 1.38 centavos (0.07%) compared to the previous day’s rate of 18.6297 pesos, according to official data from Mexico’s central bank, Banco de México (Banxico). The dollar’s daily range was between a high of 18.7705 pesos and a low of 18.6045 pesos.
The US Dollar Index (DXY), as reported by the Intercontinental Exchange, rose 0.39% to 97.56, reflecting the dollar’s strength.
Tariff Deadline Extension
On Monday, the White House announced the extension of the deadline for tariff implementation on several countries from July 9 to August 1. US Treasury Secretary Scott Bessen further stated that multiple trade announcements would be made within the next 48 hours.
Trump had initially threatened tariffs of up to the levels announced on April 2, providing a grace period and negotiation time. Once the updated deadline was communicated, moving it from July 9 to August 1, Carolina Colón, a financial market analyst at CAPITARIA México, noted the dollar’s subsequent strengthening.
Trump vs. BRICS
Market reactions also stemmed from President Donald Trump’s threats against the BRICS group, consisting of emerging economies. Trump warned that countries aligning with the “anti-US” policies of this bloc would face an additional 10% tariff.
Juan Carlos Cruz Tapia, a financial consultant, explained that the BRICS bloc expressed concern over the increasing unilateral measures distorting global trade. Trump’s 10% additional tariff threat weighed heavily on market sentiment.
Anticipation of Banxico Minutes
Domestically, the market awaits the release of minutes from Banco de México’s recent policy meeting, where the banking board decided to cut interest rates by 50 basis points to 8%, marking its fourth consecutive significant reduction.
Quásar Elizundia, an analyst at Pepperstone, stated that market operators will focus on this week’s inflation report and Banxico’s monetary policy minutes to assess the central bank’s stance amidst ongoing external volatility.
Key Questions and Answers
- What caused the Mexican peso to weaken? The peso depreciated due to the strengthening US dollar following the postponement of tariff implementation deadlines by President Donald Trump.
- When was the tariff deadline extended? The deadline for tariff implementation on several countries was moved from July 9 to August 1.
- What tariff threat did President Trump issue against the BRICS group? Trump warned that countries aligning with the “anti-US” policies of the BRICS bloc would face an additional 10% tariff.
- What factors will influence the Mexican peso in the coming week? Market operators will focus on this week’s inflation report and Banxico’s monetary policy minutes to evaluate the central bank’s stance amidst external volatility.
