On Monday, April 7, 2025, the Mexican peso faced a significant depreciation against the US dollar, marking a turbulent start to the week for the currency. The dollar was trading at approximately 20.6782 pesos per unit, reflecting a 1.40% drop for the peso, which translates to a loss of 28.3 centavos. This depreciation was part of a broader trend, with the exchange rate fluctuating between a maximum of 20.8098 and a minimum of 20.4814 after opening at 20.40.
According to various banks, the dollar was being bought and sold at varying rates. For instance, Banco Afirme reported a buying price of 19.60 pesos and a selling price of 21.30 pesos. Banco Azteca had similar figures, with a buying price of 19.65 and a selling price of 21.00 pesos. Banorte offered a buying price of 19.20 and a selling price of 20.75 pesos, while BBVA Bancomer listed a buying price of 19.84 and a selling price of 20.98 pesos. Other banks, including Banamex, Monex, and Inbursa, also provided different rates, reflecting the volatility in the market.
The depreciation of the peso is largely attributed to the renewed uncertainty in financial markets due to the tariff policies of former President Donald Trump. Gabriela Siller Pagaza, director of analysis at Banco Base, explained that the peso's decline is a response to increased risks in the markets, particularly following Trump's threats to impose a general 10% tariff on all imports to the United States from any country. This policy has raised alarms about a potential slowdown in global economic growth.
Adding to the market's anxiety, new reciprocal tariffs were announced to take effect on April 9, 2025, further complicating the situation. The comments made by Jerome Powell, the chairman of the Federal Reserve, on April 4, indicated expectations of inflationary pressures and slower growth as a result of Trump’s tariff policies. This has led to speculation that the Federal Reserve may maintain high interest rates for a longer period.
As the peso continues to struggle, it has been noted that it ranks among the most depreciated emerging currencies on this day. The volatility of the peso is reflective of a broader trend seen across emerging markets, as investors seek safer assets amid the uncertainties posed by the US trade policy.
Market analysts have pointed out that the current situation is exacerbated by fears of stagflation in the United States, which has led to a rise in the Dollar Index (DXY), a measure of the dollar's performance against a basket of six major currencies. On April 7, the DXY rose by 0.17%, reaching 103.20 units.
The peso's decline is not just a local concern; it has implications for Mexico's economy given its close trade ties with the United States. Although Mexico has not been directly affected by the reciprocal tariffs imposed by the US, analysts warn that a slowdown in the US economy could have significant negative effects on Mexico.
In the context of local economic indicators, investors are also preparing for the release of key data this week. On April 9, the inflation figures for March are expected to be published, with an annual increase projected at 3.79%, slightly above the 3.77% recorded in February. This data will be closely monitored, especially as it falls within the target range set by the Bank of Mexico (Banxico).
Additionally, the minutes from the last monetary policy meeting of Banxico will be released on April 10, 2025, providing further insights into the central bank's stance amid the current economic climate.
As the week progresses, the peso's performance will remain sensitive to both domestic and international economic developments. With ongoing trade negotiations and the potential for new tariffs looming, investors are advised to stay vigilant. The uncertainty surrounding the global economic outlook continues to weigh heavily on emerging currencies, including the peso.
In summary, the Mexican peso's significant depreciation against the dollar on April 7, 2025, is a clear indication of the market's response to rising uncertainties fueled by US trade policies. As the situation evolves, the financial markets will be closely watching for indicators of economic stability and growth.
