Mexican Peso Hits Its Highest Value of the Year

The peso strengthened following lower-than-expected inflation data in the United States, despite a cautious market atmosphere due to the tariff plans of U.S. President Donald Trump.

On Thursday, the Mexican peso appreciated against the dollar, advancing after the release of U.S. inflation figures that came in below expectations. Despite prevailing caution regarding Trump’s trade policies, the local currency gained ground.

The exchange rate closed at 20.0951 pesos per dollar, compared to 20.1797 in the previous session, according to official data from Banco de México (Banxico). This represents an appreciation of 8.46 centavos (0.42%).

Throughout the session, the dollar fluctuated between a high of 20.1989 and a low of 20.0596, marking the peso’s strongest level since mid-December. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.24% to 103.84 points.

Inflation Slowdown Fuels Fed Rate Cut Speculation

The U.S. Producer Price Index (PPI) remained flat in February, falling short of the 0.3% increase expected by analysts. This was the weakest reading since July. On an annual basis, inflation slowed from 3.7% to 3.2%.

These inflation figures bolster expectations that the Federal Reserve (Fed) may cut interest rates sooner than anticipated. Similar signals were already present after yesterday’s Consumer Price Index (CPI) report, which also came in below forecasts.

However, investors remain cautious about trade tensions, particularly as Trump has threatened to impose a 200% tariff on European wine, champagne, and other alcoholic beverages if the European Union does not remove a new tariff on U.S. whiskey.

Reduced Pressure on the Peso

Unlike the European Union and Canada, which have reacted strongly to Trump’s tariff threats, Mexican President Claudia Sheinbaum has maintained a stance of patience and negotiation. This approach has helped ease concerns over a potential trade conflict affecting the peso.

Given the recent easing of tariff-related jitters, the dollar’s downward trend remains intact, with markets awaiting the official U.S. tariff decision on April 2.