The Mexican peso depreciated in early trading on Tuesday, losing ground against the US dollar for a fourth consecutive day as 2024 comes to a close.
After closing at 20.66 to the greenback on Monday, the peso fell to 20.90 shortly before 2 p.m. Mexico City time on Tuesday. The tumble marked a 1.16% depreciation, bringing the peso to its weakest position in all of 2024.
The peso’s depreciation on Tuesday came after the currency fell 1.67% against the greenback on Monday.
The expectation that the Bank of Mexico’s benchmark interest rate will continue to decline in 2025 after five cuts this year is one factor contributing to the decline of the peso in recent days. Concern over the potential impact of the second Trump administration on the Mexican economy is another.
United States President-elect Donald Trump, who will take office on Jan. 20, has pledged to impose a 25% tariff on all Mexican exports on the first day of his second term and keep it in place until Mexico does more to stop the flow of drugs and migrants to the U.S.
In a post to X on Tuesday morning, Banco Base’s director of economic analysis, Gabriela Siller, attributed the recent depreciation of the peso to “fear” over Trump’s return to the White House.
El tipo de cambio se perfila para cerrar el año cotizando cerca de 21 pesos por dólar.
Hay miedo por el regreso de Trump. pic.twitter.com/ZbeHgOIFcB— Gabriela Siller Pagaza (@GabySillerP) December 31, 2024
“The exchange rate is shaping up to end the year at close to 21 pesos per dollar. There is fear over the return of Trump,” she wrote.
Cipactli Jiménez, an independent investment adviser, told the El Economista newspaper that “there is great uncertainty” regarding the relationship Mexican President Claudia Sheinbaum will have with Trump.
Uncertainty over the impact the policies of the second Trump administration will have on the Mexican economy “is reflected in the [current USD:MXN] exchange rate,” he added.
The worst year for the peso since 2008Â
According to Yahoo! Finance, the Mexican peso closed at 16.86 to the US dollar on Dec. 31, 2023. Thus the peso has depreciated around 19% in 2024.
Compared to the 16.30-to-the-dollar rate the peso reached in April, the depreciation is almost 22%.
The peso depreciated sharply after the ruling Morena party’s comprehensive victory in Mexico’s June 2 elections. Concern over Morena’s constitutional reform agenda, especially the judicial overhaul that Congress approved in September, was a major factor in the decline.
The election of Trump in early November, and the former and future president’s tariff threats, placed additional pressure on the peso.
On Monday, Siller noted on X that the peso was on track to record its fourth-worst year since Mexico implemented a free-floating exchange regime in 1995.
“If the exchange rate ends the year at today’s level (20.55 pesos per dollar) it will be the fourth largest annual depreciation [for the peso] since we’ve had the free-floating exchange regime,” she wrote.
The Banco Base analyst said that the annual depreciation this year would rank behind a 51.63% decline in 1995, a 22.87% depreciation in 1998 and a 25.46% weakening in 2008 amid the global financial crisis.
With reports from El Economista, Reuters and Bloomberg LÃnea
My first trip to Mexico was to Cancun ad the exchange was 3,000 to 1. At some point the zeros were cut off and now the peso is 20.85 to 1. In the long run, the peso will devalue. You can take that to the bank.
The peso was 3000:1 when you first visited Mexico? Who cares. That proves very little, if anything. The Mexican economy isn’t what it was back in 1995, or even 2005. Many people just don’t seem to understand that. Nor do they understand the US is no longer the only game in town.
The US empire is in decline and its government is supremely fiscally irresponsible. Horrible, horrible decay, incomptence, stupidity, and obvious corruption.
Mexico is a country on the move, it will find other markets if needed, and the peso’s value against the dollar and other major currencies will stabilize. Where and wheni? Nobody knows the answer to that question. Don’t pretend like you do.
Oh and you really think so? So lets see if 3 million workers from Mexico pick up and immigrate to China and send their remittance back to Mexico. Sure Mexico can sleep with many other countries but the ones that keeps them moving forward is USA and Canada. Check and see what the $$$ is every month for remittance from the USA, then tell us what game is in town. FYI, 2023 68 billion USD were sent from USA to Mexico. That is a lot of Taco’s in any currency.
In the longer run, Mexico is in a good position to grow her economy and strengthen. The one thing she has within her control is the judicial overhaul. Will she adjust before it happened or fix the problems that occur? I’d like to see it stopped but in all likelihood it will go through, some problems will be fixed and then things will get better. As for tariffs that’s just US embracing fascism and shooting itself in the foot. The more they get things wrong north of the border the more pain for everyone. But Mexico will prevail and look like the fine country with the kind of values to emulate around the workd
You get what you voted for, even with a number of anti-Morena candidates having quit or killed during the election.
This is just the beginning what is in store and coming to Mexico in 2025. All your comments are correct. The entire situation in Mexico is too complicated by many different “factors”. President Sheinbaum has so many problems right now, she doesn’t know what to do or were to start. These “problems ” are coming from all directions, it’s going to be a very bad year for the Mexican people because of the bad “choices” and “decisions” made by Obrador. Can’t blame Sheinbaum for these problems that she inherited from Obrador who turn out to be a complete “idiot”. Obrador managed to “fool” all the majority of the population of Mexico with “promises” that never came “true”. He said he was going to reduce the “poverty”. if elected. Nothing happen in his watch to achieve this goal. People of Mexico “open your eyes” and look back and ask yourself, see, is Mexico better today and the people better “off”, The answer is “NO”, only more new “challenges” and problems.to worry about in 2025. That’s the “reality” that is facing all the Mexican people in 2025 including the devaluation of the “peso” that will affect the “daily” lives of all the people.
Mexico has a dynamic and resilient younger work force. Mexicans are also very clever and industrious. Even though I don’t speak Espanol conversationally I try to pick up a few words to better my skill in Espanol often no can hear the words like singing at wallmart then the hands go up because now we area conversation that is going somewhere “ like cost of eggs just went up and where did you find that nice papaya ? I don’t have all the word but we get through it and. Have a 😆… hard to be grumpy when you know somenne up north is driving. I a snowst with no heat in their car.At the end of the day we all just want to get home at thsvend of the day.