The Bank of Mexico has expressed its concern about the possible effects of a devaluation on prices, noting that if it raises interest rates to counteract this impact, it could have mixed consequences. Although it could temporarily strengthen the peso, this would come with a slowdown in economic growth and possibly a subsequent weakness of the currency.
The perception of political risk also plays an important role in the current situation, as an increase in tensions between Mexico and the United States, combined with a perception of a lack of tools by the Mexican government to counteract Trump's measures, could increase risk aversion regarding the peso in international markets. Although, for the moment, the Mexican peso remains stable against Trump's initial actions, there are fears about possible future repercussions if trade and political threats materialize.
Prior to the most recent announcements, the market had already anticipated aggressive moves from Trump, which helped avoid an exaggerated reaction. On the other hand, external factors such as the strength of the dollar globally could exert additional pressure on emerging currencies, including the Mexican peso.
The macroeconomic resilience of Mexico, derived from solid public finances and a conservative monetary policy by the Bank of Mexico, has helped reinforce the perception of stability in the Mexican economy. However, the escalation of trade measures, especially if tariffs affect key sectors of the Mexican economy, could have a severe impact on the trade balance and further weaken the peso.
Despite the current challenges, markets are confident that some of the measures announced by Trump might moderate or be renegotiated, especially under pressure from business sectors in the United States. Although for the moment the peso has shown resilience, there are factors that could weaken it in the coming weeks or months, including the structural demand for the currency and possible capital outflows amid a landscape of greater political uncertainty.
