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.
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.”
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 FinancieroÂ
