The Mexican peso rebounds after hitting its lowest level in over two years.

The Mexican peso strengthened against the U.S. dollar for the second consecutive day on Tuesday, recovering in a session marked by erratic movements due to market jitters surrounding the U.S. elections.

The exchange rate ended the day at 20.0788 pesos per dollar, an improvement from yesterday’s 20.1512 pesos, according to data from the Bank of Mexico (Banxico). This gain of 7.24 cents, or 0.36%, helped the peso rebound after hitting a more than two-year low.

The dollar traded within a range, reaching a high of 20.3571 pesos—the peso’s weakest level in over two years—and a low of 20.0586 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, fell 0.43% to 103.44 points.

Traders are closely monitoring the U.S. elections, as the results could take days or even weeks to be confirmed given the tight race. The possibility of a Trump victory drove the exchange rate to its highest level since September 2022.

Intraday trading showed a cautious behavior, with a tilt towards a Trump victory, leading to a shift in short-term asset sales.

Mexican assets are under pressure as a potential Trump victory could strain trade relations between Mexico and the U.S., with proposals involving tariffs and a renegotiation of the USMCA. The role of Congress will also be crucial.

A Trump win with a divided Congress would lead to tariff hikes, strengthening the dollar, but without a tax cut. If Republicans win Congress, the dollar boost would be even stronger.

Conversely, Campos noted that a victory by Democrat Kamala Harris would maintain the “status quo,” likely keeping a neutral long-term impact on markets, while in the short term it could weaken the dollar across global markets.