FX.co ★ Mexican Peso Near March 2022 Lows

The Mexican peso has edged closer to 20.5 per dollar, approaching the lowest point since March 2022 at 20.85, recorded on April 8th. This shift is driven by increased uncertainty surrounding U.S. trade policy, which has heightened risk aversion and impacted emerging markets. President Trump’s temporary 90-day pause on new tariffs for non-retaliatory partners provided a fleeting uplift to the markets. However, it did little to provide lasting assurance to investors, given the ongoing unresolved U.S.-China trade dispute and the increasingly unpredictable policy environment. For Mexico, which has deeply integrated supply chains with the U.S., the ambiguity surrounding the future of global trade presents a significant threat to industrial activity and capital movement. In the absence of a foreseeable resolution, investors are continuing to migrate towards more secure assets. Consequently, the peso remains under pressure as the markets navigate a highly volatile and fragmented trade environment. The existing tariffs have already led to the closure of plants in Mexico. Furthermore, with the possibility of a U.S. recession on the horizon, Mexico’s export outlook has deteriorated.