Mexican Peso Stable Against the Dollar Following US Trade Agreement; Depreciated in July

Web Editor

July 31, 2025

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Background on the Mexican Economy and the US-Mexico Trade Relationship

The Mexican economy has long been intertwined with that of the United States, particularly through trade. Mexico is the second-largest trading partner of the US, with over $600 billion in total goods traded between the two countries annually. The Mexican peso, the official currency of Mexico, has historically experienced fluctuations due to various factors, including trade agreements and economic policies.

Key Players: Mexico and the United States

Mexico, a vibrant emerging market, is known for its robust manufacturing sector, which has attracted significant foreign investment. The United States, being Mexico’s largest trading partner, wields considerable influence over the Mexican economy. Recently, negotiations between the two nations have centered around trade agreements that aim to maintain economic stability and foster growth.

Trade Agreement and Peso Stability

In the context of recent events, Mexico secured a 90-day extension on the implementation of tariffs from the United States. This development led to the Mexican peso remaining relatively stable against the US dollar during the trading session.

July Depreciation of the Peso

However, despite the short-term stability following the trade agreement, the Mexican peso experienced depreciation in July. Various factors contributed to this decline, including global market sentiment, domestic economic indicators, and geopolitical tensions.

Impact on Mexican Economy and Citizens

The stability or fluctuation of the Mexican peso directly affects the Mexican economy and its citizens. A stronger peso makes imports cheaper, potentially reducing inflationary pressures. Conversely, a weaker peso can boost export competitiveness by making Mexican goods more affordable for foreign buyers. The recent developments in the US-Mexico trade relationship have implications for both aspects.

Key Questions and Answers

  • Q: What is the significance of the US-Mexico trade relationship? A: The US and Mexico are each other’s largest trading partners, with over $600 billion in annual goods trade. This relationship significantly influences both countries’ economic stability and growth.
  • Q: How did the recent trade agreement affect the Mexican peso? A: Following the agreement, Mexico received a 90-day extension on tariff implementation, leading to the peso remaining stable against the US dollar during that trading session.
  • Q: Why did the Mexican peso depreciate in July despite the trade agreement? A: Multiple factors contributed to the peso’s decline in July, including global market sentiment, domestic economic indicators, and geopolitical tensions.
  • Q: How does the strength or weakness of the Mexican peso impact Mexico and its citizens? A: A stronger peso can lower import prices and inflation, while a weaker peso may enhance export competitiveness. The recent trade agreement developments have implications for both aspects of the Mexican economy.