Mexican Peso strengthens amid trade wars uncertainty

March 10, 2025 ( Newswire) , rated as a top 100 investment website for investing ideas, issues market commentary from Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS.


Mexican Peso strengthens amid trade wars uncertainty

The Mexican peso has started the week with a slight appreciation against the U.S. dollar, in a context marked by rising trade tensions and signs of economic slowdown in the United States. This strengthening of the Mexican currency comes as the dollar shows signs of weakness due to economic uncertainty in the North American country. Financial markets have reacted cautiously to the latest statements by Donald Trump, leading to movements in major global currencies.

The exchange rate reached the $20.18 pesos per dollar zone, representing an appreciation of more than 0.1% for the peso. At the same time, the dollar index, which measures the value of the greenback against a basket of major currencies, registered a drop of more than 0.10%, reflecting a decline in the dollar’s value in international markets. This behavior responds to a combination of factors, including expectations of new economic policies in the United States, uncertainty about the Federal Reserve, and the effects of the trade war with China.

Recent statements by President Donald Trump have heightened concerns about a possible recession in the United States. Trump did not rule out a recession during the transition to his new tariff policies and warned of a potential increase in inflation. These policies include implementing a “reciprocal tariff” starting on April 2 and enforcing retaliatory tariffs by China. Imposing tariffs on key products has created uncertainty in sectors such as manufacturing and technology, which could further impact U.S. economic growth.

The U.S. economy has shown signs of slowing down, with recent economic data failing to meet expectations. This situation has reinforced fears of a recession, affecting investor confidence and contributing to the dollar’s depreciation. Aggressive tariff policies and weak economic data have generated uncertainty in financial markets. Additionally, various financial institutions have revised U.S. GDP growth expectations downward, indicating a potential economic stagnation in the coming months.

In response to U.S. tariff measures, China has announced up to 15% tariffs on American agricultural products, among other measures. These retaliatory actions worsen trade tensions and pressure the global economy, affecting economic growth prospects in various regions. Furthermore, other emerging economies have expressed concern over the side effects of this trade war, as currency market volatility could spread globally, impacting economic stability in trade-dependent countries.

The current situation underscores the interconnectedness of global economies and how trade policies can significantly affect financial markets and currencies. While the dollar weakens due to economic uncertainty in the United States, the Mexican peso has slightly benefited, although volatility may persist in the short term. Analysts believe that the monetary policy of the Bank of Mexico has also been a factor in the peso’s stability, as it has maintained relatively high interest rates to counter inflationary pressures and attract foreign investment.

In conclusion, strengthening the Mexican peso against the dollar reflects the complex dynamics of international trade relations and economic expectations. The uncertainty generated by U.S. tariff policies and the responses from its trading partners have influenced currency markets, highlighting the need to monitor these developments to understand their future implications closely. In a global environment where political decisions can directly affect markets, prudence in investment strategies will be key to navigating potential economic fluctuations.”

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