FX.co ★ Mexican Peso Loses Ground

The Mexican peso weakened beyond 17.2 per US dollar, pulling back from its mid-2024 highs as markets absorbed President Trump’s decision to introduce a new 15% global tariff under Section 122 and the latest economic growth data. This shift in trade policy has reinstated a significant headwind for Mexico’s export-oriented economy, reversing much of the relief rally that followed the court ruling striking down earlier emergency duties. The peso also came under pressure from a stronger US dollar, underpinned by hawkish remarks from incoming Fed Chair Warsh and persistently firm core PCE inflation at 3%, which has eroded the attractiveness of Mexico’s yield advantage.

Although a revised Q4 GDP release showed a solid 0.9% expansion across Mexico’s industrial and services sectors, the outlook has been clouded by the prospect of renewed 150-day trade surcharges, which are expected to drag on growth. In this environment, Banxico remains in the spotlight as policymakers balance the inflationary implications of the latest protectionist measures against a backdrop of weakening global demand.