FX.co ★ Mexican Peso Weakens on Risk Aversion, Rate Cut Signals

The Mexican peso weakened to around 17.88 per dollar as risk aversion increased after President Donald Trump suggested the conflict with Iran could be prolonged, driving oil prices sharply higher and pressuring emerging-market currencies. The depreciation also followed a dovish turn by Banco de México, which resumed its easing cycle with a 25 basis point cut, bringing the benchmark rate down to 6.75% in a split decision that underscored mounting concern over slowing economic activity. Policymakers indicated the possibility of one further rate reduction while emphasizing that they would closely monitor inflation dynamics and external risks. Recent data showed annual inflation accelerating to 4.63% in early March, with core inflation at 4.46%, both above the central bank’s 3% target. The peso also came under strain from expectations of widening interest rate differentials and lingering uncertainty about the outlook for growth and inflation.