Mexican Peso in Freefall: Will U.S. Tariffs Push It Past the Breaking Point?”

As the dollar strengthens, Mexico braces for economic turbulence ahead of Banxico’s key decision.

The Mexican peso depreciates against the dollar on Wednesday morning. The local currency is falling due to the widespread strengthening of the greenback, as markets await new information on U.S. tariffs set to take effect on April 2.

The spot exchange rate stands at 20.1493 pesos per dollar. Compared to yesterday’s official closing of 20.0700 units, according to data from the Bank of Mexico (Banxico), this movement represents a drop of 7.93 cents or 0.40% for the peso.

The dollar’s price is fluctuating within a range, reaching a high of 20.1542 and a low of 20.0454. The U.S. Dollar Index (DXY), from the Intercontinental Exchange, which compares the dollar against a basket of six major currencies, rose 0.09% to 104.30 points.

“The market remains cautious,” explained Banco Base in an analysis note. “The exchange rate continues to struggle to fall below 20 pesos per dollar, due to the protectionist stance of the United States and uncertainty about upcoming announcements.”

While traders keep an eye on U.S. President Donald Trump, the local market is preparing for Banxico’s monetary policy decision tomorrow. It is widely expected that the central bank will continue to ease its policy and cut rates by 50 basis points.

For now, analysts from CIBanco predict the exchange rate could fluctuate between 19.97 and 20.18 pesos per dollar for the rest of the session. Metanálisis identifies a key support level at 19.73 and a resistance level at 20.25, with technical indicators remaining neutral.

Trump’s long-threatened tariffs against Canada and Mexico go into effect