The Mexican peso has fallen past 18.7 against the USD, pulling back from its August 2024 peaks. This decline was triggered by President Trump's imposition of a 35% tariff on Canadian goods and the potential 15–20% duties on other trade partners. These actions have raised concerns that similar USMCA-related measures could stifle Mexico’s export-driven economy. Concurrently, the consistent rebound of the dollar index has added to the peso's challenges.
Recent minutes from the Bank of Mexico's June meeting indicate that, despite 325 basis points of rate cuts since early 2024, policymakers are considering more modest reductions of a quarter-point. This cautious approach is due to the headline inflation rate, which remains elevated at 4.32%, significantly above the target of 3%, and dampens hopes for a more accommodating monetary policy. Additionally, remittance inflows—a vital source of foreign exchange—face pressure due to discussions in the U.S. Senate about implementing a remittance tax. This development deprives the peso of its traditional seasonal relief and exposes it to the continuous strength of the dollar.
