The Mexican currency market experienced significant volatility on Friday, April 4, 2025, as the peso weakened substantially against the US dollar. The US dollar reached a value of 20.5048 pesos per dollar, reflecting a 2.94% increase from the previous close on April 3, 2025. At the start of the day, the exchange rate fluctuated between 19.9056 and 20.5373 pesos per dollar, highlighting the uncertainty in the markets and an increased demand for dollar-denominated assets.
The market opened at 19.911 pesos, with purchase prices positioned at 20.4956 pesos and sale prices at 20.5139 pesos. The depreciation of the peso can be attributed to several economic and financial factors, including tariffs imposed by US President Donald Trump, volatility in emerging markets, and reduced liquidity in the currency market. Over the past year, the peso has experienced an accumulated depreciation of 20.52%, bringing the exchange rate close to its 52-week range of 16.2602 to 21.2942 pesos per dollar.
As of Friday, April 4, the dollar's price varied across different banks and exchange houses. For instance, Afirme bought dollars at 19.40 pesos and sold at 21.00 pesos, while Banco Azteca offered 19.00 for purchases and 20.30 for sales. Bank of America quoted a buying price of 19.1205 pesos and a selling price of 21.322 pesos. Other institutions, like Banorte and BBVA Bancomer, also reported similar variations in their buying and selling prices.
In the broader context, the peso's decline was exacerbated by global economic concerns, particularly following China's announcement of a 34% tariff on US products in retaliation for tariffs imposed by Trump. This escalation in trade tensions has heightened fears of a global recession, prompting a risk-averse sentiment among investors.
Gabriela Siller, director of economic analysis at Banco Base, noted that the depreciation of the peso is primarily due to the increased probability of a recession stemming from Trump's tariff policies. The spot exchange rate was reported at 20.4446 pesos per dollar, marking a loss of 50.12 centavos or 2.51% from the previous day's official close of 19.9434 pesos.
In addition to the tariffs, recent labor market data from the United States revealed that 228,000 non-agricultural jobs were created in March, significantly exceeding expectations of 137,000. However, the unemployment rate rose slightly from 4.1% to 4.2%, while average hourly earnings increased by 3.8% annually. Analysts are closely monitoring comments from Federal Reserve officials, including Chairman Jerome Powell, as any indication of a cautious approach could negatively impact market sentiment.
The Dollar Index (DXY), which measures the dollar's strength against a basket of six currencies, rose by 0.51% to 102.47 units, further contributing to the peso's decline. The heightened volatility in international financial markets has left many analysts predicting that the peso could remain under pressure in the short term, especially as interest rates in the US evolve and macroeconomic stability in Mexico is assessed.
As the market closed on April 4, the dollar was reported to be trading at an average of 20.43 pesos, a change of 2.47% from the previous day's close of 19.93 pesos. This marked the end of a three-day negative trend for the peso, which had previously strengthened. The current economic forecasts for 2025 from Banco de México (Banxico) suggest that the dollar could trade between 20.24 and 20.69 pesos, reflecting the ongoing impact of Trump's policies and the uncertainty in global markets.
In summary, the Mexican peso's performance on April 4, 2025, illustrates the complex interplay between domestic economic factors and international trade dynamics, particularly in the context of escalating tariffs and global recession fears. As investors navigate this volatile environment, the future trajectory of the peso remains uncertain, hinging on both local and international developments.
