Thursday, November 14, 2024

Mexico’s peso falls yet again as Trump cabinet picks spark concern

The Mexican peso depreciated against the US dollar for a third consecutive day on Tuesday, as uncertainty over the impact a second Trump presidency will have on Mexico continues to weigh on the currency.

The Bank of Mexico’s closing USD:MXN rate was 20.67, but the peso depreciated to as low as 20.70 to the dollar earlier on Tuesday.

Mexico City bank window with a currency table showing the exchange rate between the US dollar and the Euro, both selling for over 20 pesos per dollar and Euro
Donald Trump’s campaign promises to levy heavy tariffs on Mexican exports and order mass deportations have been wreaking havoc with the Mexican peso, which has been surpassing 20 pesos to the dollar since shortly after the U.S. election on Nov. 5. (Daniel Augusto/Cuartoscuro)

At 5:30 p.m. Mexico City time, one greenback was trading at 20.60 pesos, according to Bloomberg.

The Bank of Mexico’s closing rate on Tuesday represented a 1.3% depreciation for the peso compared to its position against the dollar 24 hours earlier.

Janneth Quiroz, director of analysis at the Monex financial group, said on X on Tuesday morning that Donald Trump’s latest announcements about who will serve in his government had affected the peso.

“Trump announced that Mike Waltz will be his national security adviser,” Quiroz said, adding that the federal lawmaker is known for his “aggressive and nationalist comments.”

She also noted that Trump “plans to choose Senator Marco Rubio as his secretary of state.”

The soon-to-be 47th president of the United States announced Sunday that former acting director of the U.S. Immigration and Customs Enforcement Thomas Homan will be his “border czar.”

Trump's newly appointed 'border czar' Tom Homan speaks at a microphone
Among U.S. President-elect Donald Trump’s cabinet picks are Thomas Horman as the incoming administration’s “border czar.” (Gage Skidmore/Flickr)

Analysts at Mexican bank CI Banco said that investors are “very attentive” to Trump’s cabinet appointments, noting that they are concerned about the impact the agenda of the incoming U.S. administration will have on the Mexican economy.

Among the policies Trump has proposed that could have a major impact on Mexico and its economy are tariffs on Mexican exports to the United States and mass deportations of undocumented Mexicans in the U.S.

In addition to uncertainty about the impact of a second Trump presidency on Mexico, a general strengthening of the dollar contributed to the peso’s depreciation on Thursday.

The foreign exchange news website FX Street reported that the expectation that the Bank of Mexico (Banxico) will forge ahead with a 25-basis-point interest rate cut at its monetary policy meeting on Thursday was also a factor in the depreciation of the peso.

The significant difference between Banxico’s key interest rate (currently 10.50%) and that of the United States Federal Reserve (4.50-4.75%) helped the peso reach an almost nine-year high of 16.30 to the dollar in April.

However, the peso depreciated significantly after the comprehensive victories of Claudia Sheinbaum and the ruling Morena party in Mexico’s June 2 presidential and congressional elections. Since the recently elected Mexican lawmakers assumed their positions on Sept. 1, Congress has approved a number of constitutional reforms, including a controversial judicial overhaul that allows Mexicans to elect thousands of judges, including Supreme Court justices.

With reports from El Financiero 

Have something to say? Paid Subscribers get all access to make & read comments.
Ontario, Canada Prime Minister Doug Ford standing at a podium with the logo of the Labourers International Union of North America giving a speech. Behind him are two men watching on

Ontario premier suggests Canada end free trade with Mexico

5
Accusing Mexico of helping China skirt heavy Canadian and U.S. tariffs, Ontario Premier Doug Ford is calling for an end to the USMCA.
A person shops at a local market in Mexico City.

Sheinbaum, business sector agree to lower basic food prices

1
“We want prices to come down for consumers, especially for those who don't have much,” Sheinbaum said Wednesday.
Germán Reyes Reyes, a former army captain who became interim head of the Chilpancingo Public Security Ministry on Sept. 30, was detained by state and federal security forces for the murder of Alejandro Arcos Catalán

Chilpancingo security chief arrested for mayor’s murder

1
The deceased mayor's decapitated body was found inside his pickup truck in the state capital of Chilpancingo, Guerrero, on Oct. 6.