FX.co ★ Mexican Peso Extends Decline

The Mexican peso has weakened, nearing 20.7 per USD, and is on the brink of testing the three-year low of 20.85 that has been revisited multiple times since early 2025. This decline is driven by intensifying global trade tensions and ongoing domestic inflationary pressures. Initially, the peso gained some strength due to its tariff exemption under President Trump's 10% import directives. However, it has since faced increased pressure following China's countermeasure—a 34% tariff on U.S. goods—which has heightened fears of a looming global recession and reduced external economic demand. This currency devaluation is further exacerbated by rising concerns regarding potential U.S. tariffs on automobiles and weakening domestic economic indicators, evidenced by a stark drop in March's Consumer Confidence and persistent high inflation rates. These combined challenges have led to a decrease in foreign currency inflows and prompted Mexico's central bank, Banxico, to adopt a more cautious approach. As a result, the peso remains susceptible to additional external shocks and domestic policy adjustments.