Mexican Peso Drops 1% Amid Dollar Strength

The Mexican peso depreciated against the U.S. dollar on Wednesday, marking a sharper decline than other regional currencies.

The local currency weakened as the dollar strengthened in a market focused on various global developments, including news about Donald Trump, comments from the Federal Reserve, and escalating tensions in the Russia-Ukraine war.

The exchange rate closed at 20.3223 pesos per dollar, compared to 20.1136 pesos in the previous session, according to official data from Banco de México. This represents a loss of 20.87 cents, or 1.04%, for the peso.

Throughout the day, the dollar traded in a range between a high of 20.3340 pesos and a low of 20.0985 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the dollar against six major currencies, rose 0.47% to 106.70 points.

Key Drivers of Peso Weakness

The Mexican peso’s weakness was driven by several factors, including heightened uncertainty surrounding Donald Trump’s potential return to the political stage, which has left investors speculating about his possible policies.

Additionally, comments from Federal Reserve officials on interest rates continued to bolster the dollar’s strength. Geopolitical tensions further contributed to the peso’s decline, as safe-haven demand for the dollar increased following Ukraine’s long-range missile strikes on Russia.

After four consecutive days of gains, the peso reversed course, breaking above the 20.20 level, which could persist through the end of the year as Trump’s political resurgence and global uncertainty weigh on emerging market currencies.

Technical projections suggest that if the peso breaches the 20.80 level, it could quickly test a new resistance at 21 pesos per dollar, given the sustained dollar strength and geopolitical concerns. Investors should remain cautious as the peso faces pressure from both local and international developments.