Mexican Peso Ends Negative Week Ahead of Trump’s Return

The Mexican peso made a slight recovery on Friday after falling to its weakest level in two and a half years earlier this week. The currency strengthened marginally ahead of Donald Trump’s inauguration as President of the United States on Monday.

The exchange rate closed the session at 20.7753 pesos per dollar, compared to 20.8187 pesos on Thursday, according to official data from the Bank of Mexico (Banxico). This represented a gain of 4.34 cents or 0.21% for the peso. During the session, the dollar traded in a range between a high of 20.9393 pesos and a low of 20.6769 pesos.

USD/MXN

Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.38% to 109.35 points.

Concerns Over Trump’s Trade Threats

Donald Trump has repeatedly threatened to impose tariffs on the United States’ three largest trading partners—Canada, Mexico, and China. These threats include a potential 25% tariff on Mexican imports unless progress is made in combating drug trafficking, particularly fentanyl, and illegal immigration.

With 83% of Mexico’s exports directed to the United States, these concerns have contributed to the peso’s negative performance this week. Despite the slight gain on Friday, the currency ended the week down 7.01 cents, or 0.34%, compared to last Friday’s closing level of 20.7052 pesos per dollar.

Mixed Signals from U.S. Economic Data

Throughout the week, volatility in the peso-dollar exchange rate was driven by mixed U.S. economic indicators, which have created uncertainty about the future path of interest rates. Looking ahead, Monday is expected to be a quieter trading day due to the Martin Luther King Jr. holiday in the U.S.

Despite Trump’s threats, Mexico continues to be a strategic trading partner for the U.S. As noted by high-ranking officials from both governments, reaching agreements remains a priority to maintain economic stability and mutual benefits.

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.