The peso depreciated more strongly than other global benchmark currencies after President Donald Trump suggested the day before that he could impose tariffs on Canada and Mexico in the near future.
After being sworn in, the US president told reporters that his team was thinking about 25% tariffs for his two trading partners, which could be announced as soon as February 1, although he did not offer details.
The peso was trading at 20.6240 per dollar almost at the end of business, with a decline of 0.73% compared to the LSEG reference price on Monday, although during the day it weakened more than 1.5% to 20.7970 units.
“(Trump’s) comments increased market volatility, favoring safe-haven assets like the dollar, and weighed on the peso as Mexico’s economic stability could be threatened,” said Quásar Elizundia, market research strategist at the Pepperstone firm.
The peso reduced losses after President Claudia Sheinbaum called for calm and said she would seek dialogue with the United States. The government also issued a decree that seeks to encourage the relocation of companies in the country.
Even so, the currency showed the worst performance among a basket of reference currencies and analysts believe that it could continue to be pressured in the coming days while waiting for light on the policies that will govern the relationship between Mexico and the United States, mainly in the commercial sphere.
“The big question is whether their threats on international trade are a negotiating tactic or the prelude to a real tightening of tariff policy. Any indication in this regard could have immediate effects on the markets,” CIBanco analysts said in a report.
According to Julio Ruiz, chief economist for Mexico at Citi, the lack of clarity could keep the peso oscillating around 20.60 and 20.80 in the short term. “The key word after yesterday’s events is uncertainty,” he said.
Mexico’s productive activity is closely linked to its northern neighbor, who is its main business partner and the destination of almost 85% of national exports.
The benchmark S&P/BMV IPC stock index advanced 0.50% to 50,450.26 points, in a market attentive to the fourth quarter corporate results season.
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The securities of the Alfa conglomerate rose 3.29% to 15.70 pesos, followed by those of the Regional bank, known as Banregio, which gained 3.08% to 130.25 pesos.
In the debt market, the primary yields of Treasury Certificates (Cetes) fell in the weekly auction of government securities. The 28-day Cete benchmark rate was placed at 9.75%, three basis points below its previous auction.
With information from Reuters
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