Mexican Peso Falls as Market Crashes After a Rally
The Mexican peso weakened against the U.S. dollar on Thursday, giving back ground after posting its strongest one-day gain since March 2020.
The rally was sparked by Donald Trump’s announcement of a 90-day suspension of U.S. global tariffs.
The exchange rate closed at 20.4396 pesos per dollar, compared to 20.2818 the previous day, according to data from the Bank of Mexico (Banxico). That marks a depreciation of 15.78 centavos, or 0.78%.
During the session, the dollar traded between a high of 20.5746 and a low of 20.2833 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against six major currencies, dropped 1.91% to 101.02 points.
Tariff Relief and Lingering Volatility
Trump’s tariff pause excluded China, where duties were hiked to 125%, but was welcomed by markets, especially given the suspension of retaliatory measures from the European Union. Still, despite Wednesday’s 2.53% surge in the peso, market analysts warn of continued volatility as trade tensions persist.
The U.S.–China trade war remains unresolved, and risk assets could still see sharp corrections, given the high levels of uncertainty.
Banxico Minutes Signal Further Rate Cuts
Domestically, traders digested minutes from Banxico’s latest policy meeting, which signaled the central bank’s intent to continue easing rates. This could reduce the appeal of peso-denominated assets.
Banxico has cut its key rate by 50 basis points in each of its last two meetings, bringing it to 9%. Despite a slight uptick in March inflation to 3.80%, the figure remains close to target, supporting the case for another cut in May.
U.S. Inflation Surprise Weighs on Dollar
Earlier in the day, markets reacted to a U.S. inflation report showing a 0.1% monthly decline in consumer prices for March—well below the 0.1% increase expected. Annual inflation rose to 2.4%, also under consensus.
Though weaker-than-expected inflation typically raises expectations of Fed rate cuts and weighs on the dollar, the sharp deceleration appears tied to signs of broader economic weakness in the U.S.
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