The Mexican peso strengthened against the US dollar on Monday, closing at 19.1998 pesos per dollar—an increase of 1.01% compared to the previous day’s rate of 19.3957.
This gain was largely driven by a broad decline in the US dollar following renewed tariff threats from President Donald Trump. The US Dollar Index (DXY), which tracks the dollar’s performance against six major currencies, fell 0.65% to 98.68, signaling a widespread weakening of the greenback.
Market expectations for a Mexican interest rate cut have also risen, with analysts now predicting the benchmark rate could drop to 7.50% by the end of the year.
Dollar Weakness Supports Peso Rally
Official figures from Mexico’s central bank (Banxico) show the peso appreciated by 19.59 cents during the trading session. The USD/MXN exchange rate fluctuated between 19.4348 and 19.2015 throughout the day.
The dollar’s slide followed President Trump’s Friday announcement that tariffs on steel and aluminum imports could double to 50%. This came shortly after he accused China of violating a trade agreement related to tariffs and restrictions on key minerals.
Economic and Political Factors at Play
The peso’s recent gains have tested support levels near 19.20, with some brokers suggesting it could hit the 19-peso mark—levels not seen since the onset of the COVID-19 pandemic.
Domestically, investors are closely watching the outcome of Mexico’s first judicial elections, a process that has generated uncertainty since its inception under the previous government. Vote counting remains ongoing.
In addition, Banxico’s latest survey of private-sector analysts indicates growing optimism about an interest rate cut before year-end. The forecasted rate has fallen to 7.50% from 7.75%, implying a possible reduction of 100 basis points.
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