- The USD/MXN rises to 20.47 while the risk of automotive tariffs that affect Mexico persists; Sheinbaum promises not retaliation, which reduces support to weight.
- Emerging market currencies are under pressure while markets are prepared for possible 25% tariffs on T-MEC cars exports.
- The Mexican Ministry of Finance cuts the growth forecast by 2025; The OECD provides for a possible 1.3%GDP contraction.
The Mexican peso (MXN) remains defensive against the US dollar (USD), quoting with losses of more than 0.50% while the operators wait for the announcement of the day of the release of the president of the United States, Donald Trump, later today. At the time of writing, the USD/MXN is exchanged at 20.47.
The market mood improved, however, the emerging market currency is still stagnant while market participants expect the Trump tariffs. Although there is the possibility of lifting tariffs related to fentanyl over Canada and Mexico, there is a risk that 25% tariffs on cars extend to the countries of the treaty between Mexico, the United States and Canada (T-MEC).
Meanwhile, the president of Mexico, Claudia Sheinbaum, said she would not impose reciprocal tariffs, which caused a drop in the USD/MXN torque, which buyers acquired, maintaining the exotic pair within family levels.
The Mexican Ministry of Finance announced that it will reduce the fiscal deficit in 2026. According to Bloomberg, “the Sheinbaum administration said it will point to a budget deficit of 3.2% to 3.5% of the gross domestic product next year, less than the ambitious estimate of this year from 3.9% to 4%.”
The Ministry reviewed its growth forecast by 2025 to around 1.5%-2.3%, a very optimistic scenario compared to the 0.6%estimate of the Bank of Mexico (Banxico). The Organization for Economic Cooperation and Development (OECD) provides that Mexico’s GDP contract 1.3%.
The data in the US revealed a strong labor market, with companies hiring more people than expected by economists, exceeding February reading. At the same time, factory orders expanded above the forecasts, but decreased compared to the January figures.
This week, Mexico’s economic agenda will include gross fixed investment figures and consumer confidence data. In the US, the operators focus on the announcement of Trump tariffs, the ISM services PMI for March, the non -agricultural payroll figures and the speech of the president of the Fed, Jerome Powell.
Daily summary of market movements: Mexican weight falls due to uncertainty about tariffs
- Business confidence in Mexico deteriorated drastically in February, according to INEGI. Meanwhile, S&P Global reported that the manufacturing activity contracted for the fifth consecutive month.
- The governor of Banxico, Victoria RodrÃguez Ceja, declared that the Central Bank will remain attentive to US commercial policies and its impact on the country, with a main approach to inflation, as noted in an interview with El Financiero.
- In March, the National Employment Report of ADP revealed that companies added 155,000 people to the workforce, exceeding the forecast of more than 105,000 jobs and increasing from the 84,000 jobs created in February.
- Other data showed that factory orders in February exceeded 0.5% estimates and expanded an intermencing 0.6%, below 1.8% in January.
- At 20:00 GMT, Donald Trump is expected to announce the imposition of reciprocal tariffs on commercial partners in the White House Roses.
- JP Morgan supports an additional 50 basic points in Mexico due to the risks of an imminent recession, according to the analyst Steven Palacio. Palacio added that Mexico could fall into a recession caused by tariffs and “uncertainty around its implementation.”
Technical perspective of the USD/MXN: The Mexican weight remains stable while the USD/MXN rises above 20.40
The USD/MXN remains rise, quoting near its weekly maximum of 20.54, although it is contained due to uncertainty about the tariff result. If tariffs are applied without exceptions, the weight could be drastically deprecically. In that case, the PAR could challenge the maximum of March 4 in 20.99, followed by the peak of February 3, 21.28.
On the other hand, if Mexico is exempt from tariffs because the US complies with the free trade rules of the T-MEC, the USD/MXN could fall below the first level of support, seen in the confluence of the simple mobile socks (SMA) of 50 and 100 days around 20.35/36, followed by the mark of 20.00. A rupture of this last will expose the 200 -day SMA in 19.76.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
