During April, the peso appreciated 4.17%, equivalent to 85.4 cents, and closed the month trading at around 19.62 per dollar.
The month was marked by several significant events related to Donald Trump’s protectionist trade stance, which initially caused increased exchange rate volatility.
Although today, Wednesday, April 30, the Mexican currency depreciated 0.38% compared to the previous day’s LSEG (London Stock Exchange Group) reference price, it had its best monthly performance since the end of 2021. But why did this happen? Here’s how.
Why did the Mexican currency appreciate?
The peso’s appreciation was due to the following factors, as noted by Banco Base:
The absence of reciprocal tariffs against Mexico. This sent a signal that the countries that are part of the USMCA will receive preferential treatment from the Donald Trump administration. This could mean a strengthening of the trade relationship between North American countries.
The escalation of the trade war between China and the United States. The conflict caused the effective tariff on US imports from China to rise to 131.91%. With this, the US’s effective tariff on the rest of the world rose from 2.3% to 27.90%, the highest since 1901. Due to US protectionism, speculation has begun about the future of the dollar as a reserve currency.
During April, Trump repeatedly pressured Federal Reserve (Fed) Chairman Jerome Powell to cut interest rates; there was even speculation that they were investigating ways to remove him from office. This raised doubts about the Fed’s autonomy and contributed to the weakening of the US dollar. The dollar closed April with a 3.95% drop, the largest since November 2022.
​What was the outlook for April?
On April 2, Trump announced “reciprocal” tariffs, with a general rate of 10% for most countries and a rate between 11% and 50% for a specific group of nations.
