Overview of the Situation
The Mexican peso depreciated against the US dollar in the first trading day of the week, losing ground due to new threats from US President Donald Trump regarding a 30% tariff on Mexico starting August 1st.
The exchange rate ended the day at 18.7293 pesos per dollar, a decrease of 8.49 centavos (0.46%) from Friday’s closing rate of 18.6444 pesos, according to the official data from Mexico’s central bank (Banxico).
The dollar traded between a high of 18.7797 pesos and a low of 18.6538 pesos, while the Dollar Index (DXY) from the Intercontinental Exchange, which compares the US dollar to six major currencies, rose 0.26% to 98.10 points.
Trump’s Threats to Mexico
On Saturday, Donald Trump threatened to impose a 30% tariff on imports from Mexico, citing insufficient cooperation in addressing the US opioid crisis and reducing the trade deficit.
Mexico’s President, Claudia Sheinbaum, expressed optimism on Monday during her press conference that an agreement with the US government on security and tariffs would be reached soon. “We have a working group, and we hope to reach an agreement,” she stated.
Limited Impact on the Peso
Some analysts noted that the effect on the currency’s value was limited, as the market has grown accustomed to Trump’s constant threats and because it is expected that these tariffs will have a limited impact on Mexico due to the USMCA agreement.
“The reaction has been moderate, as it is speculated that only 5% will be added to the previously announced 25% tariff, which would have a limited effect, considering that tariffs are not being enforced strictly,” highlighted local bank Banco Base.
“The peso starts the week with losses following the tariff announcement. The depreciation has been moderate, as it is expected that the tariff’s impact will be limited if exemptions in line with USMCA are maintained,” said Juan Carlos Cruz Tapia, a financial consultant.
Key Questions and Answers
- What is the current situation with the Mexican peso? The Mexican peso has depreciated against the US dollar following new tariff threats from President Donald Trump, with the exchange rate ending the day at 18.7293 pesos per dollar.
- What are Trump’s reasons for imposing tariffs on Mexico? Trump aims to address the US opioid crisis and reduce the trade deficit by imposing a 30% tariff on Mexican imports.
- How is Mexico responding to these threats? Mexico’s President, Claudia Sheinbaum, expressed optimism about reaching an agreement with the US government on security and tariffs.
- How significant is the impact on the Mexican peso? Analysts suggest that the effect has been limited, as the market is accustomed to Trump’s threats and due to expectations of a limited impact from the USMCA agreement.
